Economics Principles & Practices

Chapter 17: International Trade

Self-Check Quizzes

1
A country has a comparative advantage when it can ____________.
A)produce more of a product than can another country
B)produce a product at a lower dollar cost than can another country
C)produce a product at a lower opportunity cost than can another country
D)produce a better product, regardless of price, than can another country
2
Alpha can produce either 10 apples or 3 oranges. Beta can produce either 12 apples or 3 oranges.
A)Alpha has an absolute advantage in the production of apples.
B)Alpha has an absolute advantage in the production of oranges.
C)Beta has an absolute advantage in the production of apples.
D)Beta has a comparative advantage in the production of oranges.
3
If a country wants to trade a product with another country, it must have a(n) ___________ in the production of that product.
A)opportunity cost
B)financial advantage
C)absolute advantage
D)comparative advantage
4
A country has a(n) ___________ whenever it is able to produce more of a given product than another.
A)absolute advantage
B)comparative advantage
C)export advantage
D)net import increase
5
A tax placed on imports to increase their price in the domestic market is called a(n) _____________.
A)ration
B)quota
C)tariff
D)allocation
6
NAFTA instituted a free trade policy between _________________.
A)Europe and Latin America
B)Australia and Great Britain
C)Canada, Mexico, and the United States
D)the nations of the Middle East
7
The ____________ argument is based on the belief that new or emerging industries should be protected from foreign competition.
A)infant industries
B)emerging corporation
C)balance of trade
D)free trade
8
The __________ rate is the price of one country's currency in terms of another country's currency.
A)variable exchange
B)floating exchange
C)fixed exchange
D)foreign exchange
9
A country has a(n) ____________ whenever the value of the products it imports exceeds the value of the products it exports.
A)trade deficit
B)balance of trade
C)trade surplus
D)export inflation
10
A persistent trade imbalance tends to __________ the value of a country's currency on foreign exchange markets.
A)reduce
B)increase
C)not affect
D)inflate
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