Question

domain 4: international economics
31 - the theory of comparative advantage states that countries should produce goods:
a. that use the most resources
b. that they can produce most efficiently
c. that they can import cheaply
d. that no one else can produce
32 - a tariff is:
a. a tax on exports
b. a quota on imports
c. a subsidy to domestic producers
d. a tax on imports
33 - which organization oversees international trade rules?
a. imf
b. united nations
c. world trade organization
d. federal reserve
34 - if the u.s. dollar appreciates relative to the euro,
a. european goods become more expensive in the u.s.
b. u.s. exports to europe increase
c. u.s. imports from europe become cheaper
d. the trade deficit will shrink
35 - an exchange rate is:
a. the price of one currency in terms of another
b. the interest rate between countries
c. the balance of trade
d. the cost of inflation
36 - a trade deficit occurs when:
a. exports are greater than imports
b. imports exceed exports
c. gdp is falling
d. tariffs are increased
37 - what is the goal of protectionist policies?
a. encourage foreign investment
b. protect domestic industries
c. increase consumer choice
d. promote free trade
38 - balance of payments includes:
a. only trade in goods
b. trade, investment, and capital flows
c. only government budgets
d. only financial accounts
39 - a quota is:
a. a tax on exports
b. a limit on the quantity of imports
c. a subsidy
d. a loan to developing countries
40 - a country with a strong currency will likely experience:
a. increased exports
b. decreased imports
c. trade surplus
d. lower export competitiveness

Explanation:

1. The theory of comparative - advantage posits countries should produce goods they can make most efficiently.
2. A tariff is a tax on imports.
3. The World Trade Organization oversees international trade rules.
4. When the U.S. dollar appreciates relative to the euro, U.S. imports from Europe become cheaper.
5. An exchange rate is the price of one currency in terms of another.
6. A trade deficit occurs when imports exceed exports.
7. The goal of protectionist policies is to protect domestic industries.
8. The balance of payments includes trade, investment, and capital flows.
9. A quota is a limit on the quantity of imports.
10. A country with a strong currency will likely experience lower export competitiveness.

Answer:

1. B. That they can produce most efficiently
2. D. A tax on imports
3. C. World Trade Organization
4. C. U.S. imports from Europe become cheaper
5. A. The price of one currency in terms of another
6. B. Imports exceed exports
7. B. Protect domestic industries
8. B. Trade, investment, and capital flows
9. B. A limit on the quantity of imports
10. D. Lower export competitiveness