Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | World Trade Organization (WTO) | f. | import quota | b. | NAFTA | g. | comparative advantage | c. | European Union (EU) | h. | absolute advantage | d. | appreciation | i. | protectionism | e. | trade war | j. | export |
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1.
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the ability of one person or nation to produce a good at an opportunity cost
that is lower than that of another person or nation
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2.
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the use of trade barriers to protect a nation’s industries from foreign
competition
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3.
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a worldwide organization whose goal is freer trade and lower tariffs
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4.
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a regional trade organization made up of European nations
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5.
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agreement that will eliminate all tariffs and other trade barriers between
Canada, Mexico, and the United States
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6.
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a limit on the amount of a good that can be imported
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7.
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a good that is sent to another country for sale
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8.
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an increase in the value of a currency
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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9.
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Which of the following resulted in a retaliation by the United States of
increased tariffs on cheeses and meats from Europe?
a. | Smoot-Hawley Tariff of 1930 | c. | Beef War of
1999 | b. | Chicken Tariff of 1963 | d. | Steel Tariff of 2002 |
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10.
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What was the result of the Bretton Woods Conference?
a. | the creation of a fixed exchange-rate system for the United States and much of
western Europe | b. | the creation of a flexible exchange-rate system for the United States and much of
western Europe | c. | the creation of the euro | d. | the creation of
NAFTA |
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11.
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When a nation imports more than it exports, economists say it has which of the
following?
a. | a trade surplus | b. | a balance of trade | c. | a trade
deficit | d. | a national difference |
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12.
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What happens when a nation’s currency depreciates?
a. | Its products become more expensive to other nations. | b. | Its trade
increases. | c. | Its products become cheaper to other nations. | d. | Its trade
decreases. |
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13.
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What is a currency system in which each country tries to keep the value of its
currency constant against one another called?
a. | a fixed exchange-rate system | c. | a floating currency
exchange | b. | a flexible exchange-rate system | d. | a constant pricing
system |
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14.
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How do countries protect their domestic economy from excessive influence by
multinational corporations?
a. | by raising the price of goods provided by the multinationals | b. | by developing their
internal economies | c. | by limiting the supplies of the multinational
corporation | d. | by requiring the multinational to export a certain percentage of its
product |
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15.
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What does a “most-favored-nation (MFN)” status mean?
a. | A country pays the same tariffs as those paid by all MFN
countries. | b. | A country has a special exemption from all tariffs in the United
States. | c. | A country has special licensing agreements with U.S.
corporations. | d. | A country is exempt from product standards that make it expensive for goods to be
imported. |
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16.
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Who is the largest trading partner of the United States?
a. | the European Union | b. | the NAFTA countries | c. | the Asian Pacific
Economic Cooperation | d. | the Southern Common
Market |
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17.
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What is a major disadvantage in the use of import barriers to make domestic
goods cheaper?
a. | Domestic manufacturers create more jobs for both citizens and
immigrants. | b. | Domestic manufacturers may lose the economic incentive to become more
efficient. | c. | Import manufacturers stop trying to send their goods to the country that has import
barriers. | d. | The line between imported and domestic goods becomes harder and harder to
draw. |
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18.
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What country is the world’s largest exporter of services?
a. | Japan | c. | United States | b. | Germany | d. | Great Britain |
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Short Answer
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Reading an Exchange Rate Table| | 2001 | 2002 | 2003 | U.S. | $1.00 | $1.00 | $1.00 | Canada | $1.55 | $1.60 | $1.35 | Mexico | 9 pesos | 10
pesos | 11 pesos | Great Britain | £0.70 | £0.65 | £0.60 | | | | |
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19.
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Which of the currencies shown has become stronger each year against the U.S.
dollar?
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20.
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Which currency has the U.S. dollar become stronger against each year since
2001?
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21.
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How many pesos was 1 Canadian dollar worth in 2002?
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Essay
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Critical Thinking
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22.
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Why is international trade better for all countries than an attempt for each
country to produce everything it needs?
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23.
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How can a country such as the United States be both a major exporter and
importer of the same types of goods?
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24.
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Twelve countries of the European Union have established a single currency called
the euro. How does this benefit those countries?
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