Economics: Today and Tomorrow © 2012

Chapter 18: Trading With Other Nations

Trading With Other Nations

1
If a country can produce more of a particular product with the same amount of resources as another country, it has _____.
A)a comparative advantage
B)an absolute advantage
C)a highly skilled labor force
D)large amounts of capital
2
What is comparative advantage?
A)The ability to produce a product at a lower opportunity cost than another country
B)The ability to produce a product at a higher opportunity cost than another country
C)The first stage of economic development
D)The final stage of economic development
3
A concept that it is profitable for a nation to produce and export a limited assortment of goods for which it is particularly suited is called _____.
A)an import
B)an export
C)absolute advantage
D)specialization
4
Money can be converted from one currency to another _____.
A)through the International Monetary Fund
B)through foreign exchange markets
C)only through a fixed rate of exchange
D)at any local store
5
A trade deficit occurs when _____.
A)foreigners spend more money is the U.S. than we spend abroad
B)the value of imports is greater than the value of exports
C)Americans spend more money on domestic goods than they do on foreign goods
D)the value of exports is greater than the value of imports
6
The fall in the price of a currency through the action of supply and demand is called _____.
A)the exchange rate
B)devaluation
C)a flexible exchange rate
D)depreciation
7
An arrangement in which the forces of supply and demand are allowed to set the price of various currencies is called _____.
A)the exchange rate
B)devaluation
C)a flexible exchange rate
D)depreciation
8
The most commonly used barrier to free trade is _____.
A)an embargo
B)a tariff
C)an import quota
D)a trade agreement
9
Which of the following is a regional trade agreement that made the euro a common currency among most of its members?
A)GATT
B)WTO
C)EU
D)NAFTA
10
Which of the following is a restriction imposed on the value of or on the number of units of a particular good that can be imported?
A)Revenue tariff
B)Protective tariff
C)Import quota
D)Embargo
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