Presentation on theme: "Japan’s balance of payments is in positive territory."— Presentation transcript:
1 Japan will trade electronic equipment for goods in other countries as long as Japan’s balance of payments is in positive territory.Other countries have absolute advantage in electronic equipment.Japan has comparative advantage in electronic equipment.Other countries have more desirable exchange rates.
2 Which group is MOST LIKELY to benefit if the US Dollar appreciates against the Yen? Japanese business with contracts to buy US goodsUnited States banks holding Japanese currencyUnited States investors buying Japanese stockTourists traveling from Japan to the United States
3 Which group benefits the most when the US Dollar depreciates? Foreign governments that hold US Treasury bondsCitizens from other countries traveling to the United StatesBusiness in the US that must repay loans to banks in other countriesUS citizens traveling in other countries
5 Why do domestic producers of a good benefit from trade barriers like embargos or quotas? The number of goods imported is lowerThey decrease the desire for other countries’ goodsDomestic producers get money from the governmentThey tax the foreign completion
7 Balance of trade differs from balance of payments in that balance of trade Is not used when calculating GDPMeasures only purely financial transactionsIs calculated by the FedMeasures only exports minus imports
8 What is MOST LIKELY to happen if the dollar becomes stronger relative to other currencies? Both imports and exports will decreaseBoth imports and exports will increaseImports will decrease, exports will increaseImports will increase, exports will decrease
10 Which statement is correct concerning NAFTA’s role in trade NAFTA was replaced by the EU and is no longer relevantIt is an agreement that promotes more free tradeThe countries that agreed to NAFTA were anti-trade before the agreementNAFTA establishes many trade barriers between the US and Mexico
11 A US tariff is placed on all imported MP3 players A US tariff is placed on all imported MP3 players. Which statement is true?Domestic producers of MP3 players will be hurt because they will now have more competition.Foreign producers of MP3 players will be hurt because their goods are more expensive now.Domestic consumers will be helped because there will be fewer goods to choose from.Foreign producers by MP3 players will be helped because the domestic goods are more expensive now.
12 Embargo Quota Tariff Subsidy If a country wanted to implement a barrier to trade that would help its producers AND consumers, which option would be best?EmbargoQuotaTariffSubsidy
14 Countries X and Y both produce salt and sugar Countries X and Y both produce salt and sugar. They have the same opportunity costs for both goods. Based on their information, which is true concerning trade between these countries?There is no information concerning absolute advantage so a decision about trade cannot be reached.Country X has comparative advantage in sugar and Country Y has comparative advantage in salt.Since neither has comparative advantage, they will not benefit from trade with each other.They should flip a coin to decide who should produce sugar and then trade to be better off.
15 If the government pays a business a subsidy, what is MOST likely to happen in that market? The market will see an increase in supply of the good.The market will see an increase in demand for the good.There will be a decrease in demand for the good.There will be a decrease in the quantity supplied.
16 Which BEST describes exchange rates? The price of one nation’s currency in terms of anotherAn interest rate charged to consumers who take out a loanAn increase in the price of a market basket over a given time periodThe difference between the total number of exports minus the number of imports
18 Country X has decided that economic growth will be their primary goal for the next several years. The best way to achieve this would be toInvest heavily in the stock marketInvest in capital and education of workersDecrease trade with other countries and focus on more domestic productionReduce the amount of government spending
19 Which headline would ASEAN be MOST LIKELY to oppose? “Philippines considering subsidies to fishing industry.”“Vietnam to remove quotas on Malaysia.”“Canada favors trade with Mexico over the US.”“Germany increasing tariffs on French goods.”
21 One argument in favor of a tariff would be that it would Help foreign producers by allowing them to ship goods to the USReduce competition for domestic producersForce foreign companies to ship goods that meet certain quality standards in the USHelp domestic consumers by allowing them to pay a lower price
22 How do tariffs affect domestic consumers over time? There is a wider variety of goods availableThe consumers pay lower prices for both foreign and domestic goodsFewer foreign goods are available and domestic producers will likely increase pricesDomestic goods are more expensive, but foreign goods are cheaper
24 Which trade barrier is associated with laws that require certain shipping methods and proper handling of food or equipment?EmbargoesSubsidiesQuotasStandards
25 The United States does not allow any company to legally import goods from Cuba. This type of trade barrier is known as a/anSubsidyQuotaEmbargoStandard
26 The United States exports $10 million worth of farm equipment to Nicaragua. In terms of international accounting, this transaction will show up inOnly the balance of trade because it is an exportNeither the balance of trade or balance of payments because it deals with money not goodsBoth the balance of trade and balance of paymentsOnly the balance of payments because it is an export
28 Trade will MOST LIKELY take place when two countries Specialize in producing goods in which they have absolute advantageProduce essentially the same goodsHave the same opportunity costs in goodsSpecialize in producing goods in which they have comparative advantage
30 Suppose the EU removes ALL tariffs, embargoes, subsidies, and quotas Suppose the EU removes ALL tariffs, embargoes, subsidies, and quotas. What is MOST LIKELY to happen to the international value of the Euro?Depreciate, because Americans will want more European goodsAppreciate, because Europeans will buy more goods from other countriesDepreciate, because Europeans will buy more goods from other countriesNo change because trade barriers do not affect exchange rates