eco 372 week 5 knowledge check
Week 5 Knowledge Check Study Guide
Concepts Mastery Questions
TRADE DEFICITS
INTERNATIONAL
TRADE;
TRADE TARIFFS
100%
TARIFFS
100%
EXCHANGE RATES
100%
TRADE RESTRICTION
100%
Concept: TRADE DEFICITS
100%
100%
Mastery 100% Questions
1
2
3
4
5
6
Score: / 6 6
1
1.
In the U.S. current account, most of the trade deficit results from an excess of imported
A.
B.
C.
D.
merchandise and services
merchandise
services
transfer
Correct:

Concept: INTERNATIONAL TRADE;
2.
Mastery 100% Questions
2
What is the difference between the balance of trade and the balance of payments?
A.
B.
C.
D.
The balance of trade is only part of the balance of trade.
The balance of payments is only part of the balance of trade.
The two are different parts of the balance of merchandise
accounts.
The two are different parts of the balance of financial and
capital accounts.
Correct:

Concept: TRADE TARIFFS
Mastery 100% Questions
3
3.
If a government has implemented significantly higher trade tariffs, but does not want this
action to affect the value of its currency, it will
A.
B.
C.
D.
sell foreign currency because the tariffs will tend to make the
domestic currency depreciate
buy foreign currency because the tariffs will tend to make the
domestic currency appreciate
sell foreign currency because the tariffs will tend to make the
domestic currency appreciate
buy.
Correct:

Concept: TARIFFS
Mastery 100% Questions
4.
During 2007, the United States and Japan announced possible limits on Chinese imports
through higher tariff rates on Chinese products. To avoid these limits, China would have
to
A.
B.
C.
D.
decrease the value of the yuan and increase its trade surplus
decrease the value of the yuan and decrease its trade surplus
increase the value of the yuan and increase its trade surplus
increase the value of the yuan and decrease its trade surplus

4
Concept: EXCHANGE RATES
Mastery 100% Questions
5.
If a country wants to prevent its exchange rate from falling, it could
A.
B.
C.
D.
remove restrictions on imports
place restrictions on imports
pursue easier monetary policy
remove any subsidies on exports

.
5
Concept: TRADE RESTRICTION
Mastery 100% Questions
6.
All other things being equal, an increase in trade restrictions on imports will
A.
B.
C.
D.
reduce the demand for foreign currency, causing it to
appreciate
reduce the demand for foreign currency, causing it to
depreciate
increase the demand for foreign currency, causing it to
appreciate
increase the demand for foreign currency, causing it to
depreciate
6

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