Unit 4, revision

What is the balance of payments?

• It is a record of all financial transactions between a country and the rest of the world over a specific period.

• It measures the difference between a country's exports and imports of goods only.

• It is a record of a country's government budget and expenditures.

What is a trade surplus?

• When a country exports more goods and services than it imports.

• When a country imports more goods and services than it exports.

• When a country's government budget is in surplus.

What is the main objective of economic integration among countries in a regional bloc like the European Union (EU)?

• To establish a common currency for all member countries.

• To eliminate trade barriers and promote economic cooperation among member countries.

• To ensure that member countries maintain strict control over their monetary policies.

How does a strong domestic currency impact a country's exports and imports?

• It has no impact on exports and imports.
• It increases both exports and imports.
• It makes exports more expensive and imports cheaper.
• It makes exports cheaper and imports more expensive.

What is a floating exchange rate system, and how does it differ from a fixed exchange rate system?

• A floating exchange rate system is determined by the government, while a fixed exchange rate system is determined by the forex market.
• A floating exchange rate system pegs the currency value to another currency, while a fixed exchange rate system allows the currency value to be determined by the forex market.
• A floating exchange rate system is more stable than a fixed exchange rate system.
• A floating exchange rate system allows the currency value to be determined by the forex market, while a fixed exchange rate system pegs the currency value to another currency or a basket of currencies.

What are the main arguments for implementing quotas in international trade?

• Increasing unemployment rates
• Encouraging foreign investment
• Protecting domestic industries, reducing trade deficits, and maintaining national security
• Promoting fair competition

What is the difference between a common market and customs union?

• A common market allows for the free movement of goods within a country, while a customs union only allows for the free movement of services
• The common market allows for the free movement of goods, services, people, and capital among member countries, while a customs union eliminates tariffs and quotas on trade among member countries and establishes a common external tariff on non-member countries.
• A common market eliminates tariffs and quotas on trade among member countries, while a customs union establishes a common external tariff on member countries
• A common market and customs union are the same thing and can be used interchangeably

An increase in a country's interest rates relative to other countries is likely to:

• Strengthen its currency

• Weaken its currency

• Have no effect on its currency

• Stabilize its currency

Which of the following is an example of a trade protection measure?

• Tariffs

• Trade liberalization

• Multinational corporations

What is the purpose of anti-dumping duties in trade protection?

• To increase competition in domestic industries
• To reduce the cost of imported goods
• To protect domestic industries from unfair competition
• To promote fair trade practices