International Economics Review

Which of the following is true?

• Absolute advantage leads to most trade.

• Comparative advantage leads to most trade

• Comparative advantage has no effect on trade.

• Comparative and absolute advantage are the same.

What is the ability to produce more of a given product with the same amount of resources known as?

• comparative advantage

• trade balance

• absolute advantage

• specialization

What is the ability to produce a product most efficiently known as?

• Comparative advantage

• Absolute advantage

• Division of labor

• Opportunity cost

When a currency gains value, we say it has

• depreciated

• appreciated

• exchanged

• gotten weaker

When a currency loses value, we say it has

• depreciated

• appreciated

• exchanged

• gotten stronger

A trade war is a cost of

• trading blocs

• globalization

• trade barriers

• exchange rates

_____ raises the standard of living worldwide and can lead to a more peaceful, interdependent world.

• trade barriers

• exchange rates

• protectionism

• free trade

People traveling to another country and people who import foreign goods benefit from

• appreciation

• depreciation

• trade barriers

• protectionism

Embargoes, tariffs, and quotas are examples of

• trading blocs

• trade barriers

• free trade

• exchange rates

An exchange rate

• is the value of a currency relative to another currency.

• is the ability to produce more of a given product.

• is the ability to produce a product most efficiently.

• occurs when a nation exports equal their imports.