1. If there were a decrease in the worldwide production of oil, which of the following
would most likely occur?
A. Global consumption of oil would increase.
B. Economic growth in oil-importing countries would decrease.
C. International spending on research into alternative energy sources would decrease.
D. Global exploration for new oil reserves would decrease.
2. Two countries are currently trading with each other. The countries agree to
remove all trade restrictions on products traded between them. Which of the
following is most likely to decrease?
A. The variety of goods available
B. The prices of imported goods
C. The quality of goods available
D. The amount of imported goods
3. Give two reasons why a government might impose a tariff on an imported
product even though the economic costs of the tariff to the domestic economy
are greater than its economic benefits.
Score & Description
The response gives two reasons from the list below.
The response gives one reason from the list below.
No appropriate response.
Credited responses could include
(a) Tariffs might be used to protect a developing nation’s new or fragile industry or to improve domestic production of a product.
(b) Tariffs might be used as a means of diversifying a developing nation’s economy by limiting competition from imports.
(c) Tariffs might be used as a means of protecting national security.
(d) Tariffs might be used to protect domestic employment in a specific industry,
(e) Tariffs might be used as a revenue source.
(f) Tariffs might be used to discourage consumption of goods from certain countries or to discourage harmful or undesirable goods (e.g., cigarettes).
(g) Tariffs might be used to counter tariffs from other countries (retaliatory).
(h) Tariffs might be used to prevent outsourcing jobs in a certain industry or business.
(i) Tariffs might be imposed because they are supported by domestic groups with the ability to influence political decision making.
(j) Tariffs might be imposed because certain organized groups are willing to spend money to promote them.
(k) Tariffs might be imposed because the economic costs are typically spread over a large number of people, each of whom pays only a little and may not recognize the cost.
(l) Tariffs might be imposed to make the country self-reliant on the product.
(m) Tariffs might be imposed to exert political pressure on a country.
(n) "To protect a business or a product that the government wants to produce within the country" is acceptable but it must be "a product" or "a business" and not plural (products/businesses).
The following are not acceptable as stand-alone reasons:
"To increase market price"
"To increase the economy"
"To regulate imports"
4. If consumers from Country X greatly increase their purchases of products from
Country Y, the value of these two countries’ currencies relative to one another
will change in which of the following ways?
A. The values of both countries’ currencies will increase.
B. The value of Country X’s currency will increase; the value of Country Y’s
currency will decrease.
C. The value of Country X’s currency will decrease; the value of Country Y’s
currency will increase.
D. The values of both countries’ currencies will decrease.
5. Because Country A has no domestic sources of wood, it imports all its wood from
wood-producing countries. If the price of wood in wood-producing countries rises
substantially, which of the following is most likely to occur?
A. Country A will import more wood to meet rising demand.
B. Country A will impose a tariff on wood imports.
C. Housing prices in Country A will increase as wood imports become
D. Profits in other wood-producing countries will increase because of
increased exports to Country A.
6. Which of the following has been most important in reducing poverty over time?
B. Economic growth
C. International trade
D. Government regulations
7. Country X and Country Y have similar populations and natural resources. Which
of the following best explains why Country X would have a higher rate of
economic growth than Country Y?
A. Country X invests more in education.
B. Country X imports more consumer goods.
C. Country X places higher taxes on businesses.
D. Country X pays larger salaries to government officials.
8. International trade and specialization most often lead to which of the following?
A. An increase in a nation’s productivity
B. A decrease in a nation’s economic growth in the long term
C. An increase in a nation’s import tariffs
D. A decrease in a nation’s standard of living
9. Which of the following best explains why domestic industries are often
successful in convincing Congress to place tariffs on certain imported products?
A. The revenue generated from the tariffs is less than the revenue from taxes
on products produced by the industry.
B. The revenue generated from the tariffs is greater than the benefits of the
tariffs to the industry.
C. The cost to any one consumer is small, and the benefits to the industry
D. The benefit to any one consumer is large, and the cost to the industry