AP MACRO International Economics

Question 1

What is the effect of a tariff on the price of imported goods?

Accepted Answer

It increases the price of imports.

Answer

It decreases the price of imports.

Answer

It has no effect on the price of imports.

Answer

It eliminates imports from the economy.

Question 2

Which of the following is a likely consequence of a country having a trade deficit?

Accepted Answer

The country accumulates foreign debt.

Answer

The country exports more than it imports.

Answer

The country’s currency appreciates.

Answer

The country’s economy enters a recession.

Question 3

What does the term "comparative advantage" refer to in international trade?

Accepted Answer

The ability to produce a good at a lower opportunity cost than another country.

Answer

The ability to produce more of a good than any other country.

Answer

The advantage of producing goods that are in high demand internationally.

Answer

The ability to impose tariffs to reduce competition.

Question 4

What happens to the value of a country's currency if it has a trade surplus?

Accepted Answer

The currency appreciates.

Answer

The currency depreciates.

Answer

There is no effect on the currency value.

Answer

The currency becomes less volatile.

Question 5

Which of the following is a reason why countries engage in international trade?

Accepted Answer

To gain access to goods and services that are not produced domestically

Answer

To prevent foreign investment

Answer

To maintain protectionist policies

Answer

To reduce their GDP