True/False
Indicate whether the
statement is true or false.
|
|
|
1.
|
Health inspections on food products limit trade between nations.
|
|
|
2.
|
Free traders often argue that new or emerging industries should be protected
from foreign competition.
|
|
|
3.
|
Protectionists argue that trade barriers keep a nation from becoming too
dependent on other countries.
|
|
|
4.
|
The World Trade Organization recently replaced the General Agreement on Tariffs
and Trade.
|
|
|
5.
|
Imports are goods and services that one country sells to other countries.
|
|
|
6.
|
A country has a comparative advantage in trade when it is able to produce a
product relatively more efficiently.
|
|
|
7.
|
Free traders favor few or even no trade restrictions.
|
|
|
8.
|
One effect of tariffs and quotas is higher prices on domestic products.
|
|
|
9.
|
Congress passed the Smoot-Hawley Tariff in 1930 and successfully protected U.S.
industry while increasing trade.
|
|
|
10.
|
The foreign exchange rate is the price of one country's currency in terms
of another country's currency.
|
|
|
11.
|
When President Nixon refused to redeem foreign-held dollars for gold in 1971,
the world went from a fixed exchange rate to a floating exchange rate.
|
|
|
12.
|
When the dollar falls in relation to foreign currencies, American consumers can
buy imported goods more cheaply.
|
|
|
13.
|
An advantage of flexible exchange rates is that trade deficits tend to
automatically correct themselves.
|
Multiple Choice
Identify the
choice that best completes the statement or answers the question.
|
|
|
14.
|
Tariffs and quotas can have all of the following effects EXCEPT
a. | promoting third-world development. | b. | increasing prices consumers pay for
goods. | c. | protecting domestic industry. | d. | reducing trade
deficits. |
|
|
|
15.
|
The Smoot-Hawley Tariff of 1930 resulted in
a. | the lowest tariff rates in U.S. history. | b. | the highest tariff
rates in U.S. history. | c. | rapid growth of international
trade. | d. | significant growth of domestic industry. |
|
|
|
16.
|
The international agency that administers trade agreements and settles trade
disputes is
a. | GATT. | c. | NAFTA. | b. | WTO. | d. | the United
Nations. |
|
|
|
17.
|
A protective tariff is used to
a. | give inefficient domestic industries an advantage. | b. | expand
trade. | c. | increase revenue. | d. | gain a comparative
advantage. |
|
|
|
18.
|
The Reciprocal Trade Agreements Act
a. | allowed the United States to increase tariffs. | b. | allowed the United
States to reduce tariffs up to 50 percent if other nations agreed to do the same. | c. | stated that tariffs
on imports could not be higher than tariffs on exports. | d. | provided for a
balance of payments. |
|
|
|
19.
|
The North American Free Trade Agreement proposed free trade between the United
States and
a. | Central American countries. | c. | the European
Union. | b. | Brazil and Mexico. | d. | Canada and Mexico. |
|
|
|
20.
|
The United States trade deficit causes
a. | the value of the dollar to strengthen in foreign exchange
markets. | b. | the value of the dollar to fall in foreign exchange markets. | c. | increased employment
opportunities for Americans in import industries. | d. | worldwide
recessions. |
|