Questions: 1) Free Trade between nations often results in
a) Higher prices for consumers
b) Net Loss of Jobs in both nations
c) Fewer goods purchased by consumers
d) Loss of jobs in specific, concentrated industries
e) Lower standards of living in both nations
2) The Import-Export Equilibrium Model attempts to show that
a) Eventually, the value of imports into a country will always equal the value of exports sent out of a country
b) Price levels should reflect a "fair return" to all producers
c) Excess Supply of a good in one nation can help to meet excess Demand for that good in another nation
d) Tariffs help consumers by equalizing prices among competing products
3) In one of our lessons, we examined that fact that the Tart Cherry Producer members in the United States "dumped" cherries rather than placing them on the market for sale. The reason for this was:
a) To limit the number of cherries, and thus raise prices
b) To insure that only the highest quality cherries reach the market, thus increasing the value of domestic cherries
c) To react to a declining demand for cherries by consumers
d) To make sure that an equal number of domestic and imported cherries were offered for sale out of trade fairness.
4) An example of a Customs Union is the
a) NAFTA
b) World Trade Organization
c) International Monetary Fund
d) European Union
e) World Olympics Committee
5) A significant difference between Free Trade Associations and Customs Unions is that:
a) Customs Unions are temporary and limited in time
b) Customs Unions can not enact Tariffs on goods from non-members
c) Customs Unions require inspection of all goods entering a country
d) Customs Unions can require all members to have common trade policies with all non-members
e) Customs Unions are unique to Britain and its former colonies
6) Turkey and Kenya have a Floating Currency Exchange arrangement. If Turkish demand for Kenyan goods increases, the resulting trade will:
a) Increase the value of Turkish currency against Kenyan currency
b) Increase the value of Kenyan currency against Turkish currency
c) Increase the value of both currencies against all world currencies
d) Decrease the value of both currencies against all world currencies
e) Have no effect on the currency valuation
7) One challenge in current US-China Trade Policy is that
a) China has Comparative Advantage in all products
b) China does not permit its currency to freely float against the dollar
c) China is a member of multiple Free Trade Associations
d) There are heavy Tariffs on all Chinese goods imported to the US
e) China's population is so much larger than the United States
8) If the strength of a currency changes based on how much the citizens of one nation are buying from a foreign nation, this currency is said to be
a) Floating
b) Pegged
c) On a Gold Standard
d) In Disequilibrium
e) Protectionist
9) Often, government leaders will propose tariffs to protect domestic industries. If enacted, which of the following is likely to occur in that nation's macroeconomy?
a) Lower prices for consumers
b) A shift to the left in the nations Aggregate Supply
c) Higher prices for that good, and thus, lower disposable income for consumers
d) An increase in Aggregate Demand for all goods and services in the economy
e) An increasing in personal levels of savings
10) Which of the following could be a positive effect of a decline in the value of US Currency?
a) Consumers would pay lower prices for imported goods
b) US exporters would be more competitive in international markets
c) US importers would be more competitive in international markets
d) China would be less willing to export goods to the US
e) The US would be released from NAFTA standards