International Trade Answers

In a short paragraph, discuss the pros and cons of signing a free trade agreement. What are two benefits and two drawbacks to agreements such as NAFTA?

Data courtesy of X-Rates The above charts show the exchange rates between the US dollar and two other currencies in 2008. During the months shown, the number of Mexican pesos (MXN) in one dollar rose (from 10.2 to 13.1). The number of British pounds (£) in one dollar also rose (from .51 to .65). Based on the charts, did the value of the US dollar increase or decrease during these months?

Photo by Steve Hopson As the new president of the United States, you are visiting a local supermarket on a tour. You notice that the cost of bananas is extremely high. One of your advisers explains to you that the US imports over 99 percent of its bananas each year because bananas grow better in other countries. The adviser tells you that the US has quotas and tariffs on banana imports from other countries. What steps could you take to lower the prices of bananas so that they are more affordable? Describe two changes you would make to trade agreements, quotas, and tariffs.

CLIMATEYour country has a dry, desert climate, and your neighbors have a warm, rainy climate.COSTSYour country is able to grow oranges at a cost of 35 cents a pound, and your neighbors can grow them for 10 cents a pound.SKILLSMost citizens in your country are trained in the service industry, and most of your neighbors’ citizens are trained in agriculture and farming.

Why would countries be willing to place barriers on trade? Explain two factors that might encourage a country to place quotas and tariffs on imported goods.