45a and 45b Practice

What is voluntary trade?

• Trade that occurs only under government regulation

• Trade that happens when both parties expect to benefit

• Trade that is forced upon countries

• Trade that results in financial losses for both parties

What is specialization in trade?

• Producing a wide variety of goods to increase profits

• Focusing on producing a limited range of goods efficiently

• Avoiding trade to develop local industries

• Restricting imports to protect domestic markets

How does specialization benefit a country in trade?

• It allows a country to produce all goods independently

• It increases efficiency and lowers production costs

• It reduces dependency on foreign goods

• It creates more trade barriers

What is an example of a trade barrier?

• Free trade agreement

• Import tax

• International partnership

• Specialization

Which of the following is a major benefit of trade?

• Higher costs for consumers

• Limited access to goods and services

• Increased variety of products

• Decreased competition

What is a quota in terms of trade barriers?

• A tax imposed on imported goods

• A restriction on the number of goods that can be imported

• A total ban on foreign products

• A free trade agreement

What is a tariff?

• A subsidy provided to domestic producers

• A tax imposed on imported goods

• A limit on the number of exports

• A penalty for exporting too much

Why do governments impose tariffs?

• To encourage foreign trade

• To protect domestic industries from foreign competition

• To increase imports

• To eliminate trade barriers

What is an embargo?

• A tax on imported goods

• A limit on imported goods

• A complete ban on trade with a specific country

• A government subsidy

Which trade barrier would be most effective in stopping all trade with a country?

• Tariff

• Quota

• Embargo

• Subsidy