DAILY QUIZ: International Trade
1. List three arguments in favor of Free Trade
a.
b.
c.
4. List three arguments against Free Trade
a.
b.
c.
7. True or False. The number of countries in the European Union exceeds the number of
countries in the Eurozone.
8. True or False. The United States exports more goods and services than we import.
9. True or False. The World Trade Organization includes about 150 member nations and
serves as the international body that promotes international trade and helps
resolve trade disputes between and among member nations.
10. Which of the following is FALSE:
a. International trade is based on the theory of comparative advantage
b. International Trade is a “zero sum game” – which means that if one nation
gains from trade, the other nation loses, so that the gains and losses sum
to zero.
c. International trade allows specialization among nations which can increase
world output
d. Since the end of World War II, the U.S. and most other nations have reduced
tariffs so that tariffs now are substantially lower than they were in the
1930’s.
11.
Ceteris paribus, Which of the following would lead to a positive contribution to the
U.S. Balance of Payments?
a. The U.S. reduces tariff rates on imported goods
b. IBM pays dividends to British shareholders
c. New Zealand lamb becomes more popular in the U.S. and sales increase
d. The U.S.reduces the number and the cost of military personnel stationed
in Korea
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12. In 2009 about 100 Japanese Y = $1. Now, about 80 Japanese Y = $1. Based on
these ratios, the U.S.Dollar has (appreciated/depreciated), and the Japanese Yen
has (appreciated/depreciated).
13. Ceteris paribus, If the U.S. Dollar depreciates against the Euro,
a. The effective price of U.S. goods sold in Europe decreases
b. The effective price of U.S. goods sold in Europe increases
c. The effective price of European goods sold in the U.S. decreases
d. There is no change in the effective price of U.S. goods sold in Europe
14. The value of the U.S. dollar is backed by:
e. Gold reserves
f. Gold and Silver reserves
g. Guarantees from the U.S. Congress and the FED
h. Its purchasing power
15. An expansionary monetary policy in the U.S. will tend to: (ceteris paribus)
a. Depreciate the value of the U.S. dollar
b. Appreciate the value of the U.S. dollar
c. Have no effect on exchange rates
16. –18. Consider this list of actions. Identify whether each would be a Positive (P) or a
Negative (N) or not an item included ( ()) in the U.S. Balance of Payments.
a. ____ A German tourist buys tickets to visit Disneyland in California
b. ____ A U.S. tourist rents a beach umbrella in Cancun
c. ____A Texan tourist spends Dollars on a visit to the Statue of Liberty
d. ____Walmart imports a container of toasters from China
e. ____U.S. exporters sell Louisiana rice to India
f. _____The Chinese government buys $100 million Dollars worth of U.S.
government bonds
19. Generally, since monetary policy affects both the interest rate and the value of a
currency (ceteris paribus), an expansionary monetary policy will
a. Raise both the interest rate and the value of the currency.
b. Lower both the interest rate and the value of the currency
c. Lower the interest rate, but raise the value of the currency
d. Raise the interest rate, but lower the value of the currency
20. True or False. The U.S. has a negative Current Account but a positive Capital
Account Balance.