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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

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

c)         International
Monetary Fund

d)         European

e)         World Olympics

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

e)         Customs Unions
are unique to Britain and its former colonies

Turkey and Kenya have a Floating Currency Exchange arrangement. If
Turkish demand for Kenyan goods increases, the resulting trade


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

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

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


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

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

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