Trade Barriers Answers

1

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Which factor plays a role in establishing the value of a country’s currency?

A

the attractiveness of the currency design

B

the location of the country

C

supply and demand

D

distance between countries

2

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Which of these statements most accurately describes currencies in North America?

A

All countries in North America use the US dollar.

B

All countries in North America use the euro.

C

North American countries have done away with separate currencies.

D

Each country in North America uses its own currency.

3

If investors can earn 10 percent interest in an account in Mexico but just 3 percent in the United States, those investors will most likely

A

continue to invest in the United States and have no effect on the exchange rate.

B

want to invest in Mexico and cause the exchange rate to rise.

C

try to do anything possible to keep the exchange rate from changing.

D

want to invest in Mexico, which will cause the peso to appreciate.

4

Read this news report about a planned devaluation of the bolivar, the currency of Venezuela.The president of Venezuela announced that the country would be devaluating the bolivar for the fifth time in nine years. The official rate is falling from 4.3 bolivars to the dollar, to 6.3, a 32% devaluation. By increasing the bolivar value of exports of oil to the US and other nations, the government hopes to alleviate a budget crisis caused by its increasing reliance on borrowing to meet spending obligations.In response to the announcement, the people of Venezuela lined up today to buy televisions, electronics, and airline tickets in order to protect themselves from projected price increases.

A

rising inflation.

B

price deflation.

C

declining inflation.

D

increased imports.

5

What is an example of a country that makes use of another nation’s currency?

A

France

B

Germany

C

Panama

D

Mexico

6

The chart below shows an exchange rate table.

A

Japan's currency shows that it has the strongest economy of any country.

B

The value of each currency is shown in relation to the US dollar.

C

It would take six British pounds to purchase one US dollar.

D

Swiss francs are the strongest currency in Europe.

7

The chart below shows an exchange rate table.

A

US dollar.

B

Swiss franc.

C

Japanese yen.

D

euro.

8

There would be no separation between one country’s economy and another’s if the entire world

A

shared the same currency.

B

chose paper currency over coins.

C

eliminated denominations for currency.

D

agreed to use only two types of currency.

9

Which of these factors would strengthen demand for a nation’s currency on the international market? Select all that apply.

A

high domestic inflation

B

stability of government

C

victory in war

D

high gross domestic product

E

defeat in war

F

low unemployment rates

10

The graph below shows the value of the US dollar versus the Canadian dollar.

A

rising against the Canadian dollar.

B

falling against the Canadian dollar.

C

more than twice that of the Canadian dollar.

D

about half that of the Canadian dollar.

11

What is an example of a country that makes use of another nation’s currency?

A

France

B

Germany

C

Panama

D

Mexico

12

Read this news report about a planned devaluation of the bolivar, the currency of Venezuela.The president of Venezuela announced that the country would be devaluating the bolivar for the fifth time in nine years. The official rate is falling from 4.3 bolivars to the dollar, to 6.3, a 32% devaluation. By increasing the bolivar value of exports of oil to the US and other nations, the government hopes to alleviate a budget crisis caused by its increasing reliance on borrowing to meet spending obligations.In response to the announcement, the people of Venezuela lined up today to buy televisions, electronics, and airline tickets in order to protect themselves from projected price increases.

A

rising inflation.

B

price deflation.

C

declining inflation.

D

increased imports.

13

There would be no separation between one country’s economy and another’s if the entire world

A

shared the same currency.

B

chose paper currency over coins.

C

eliminated denominations for currency.

D

agreed to use only two types of currency.

14

The graph below shows the value of the US dollar versus the Canadian dollar.

A

rising against the Canadian dollar.

B

falling against the Canadian dollar.

C

more than twice that of the Canadian dollar.

D

about half that of the Canadian dollar.

15

The chart below shows an exchange rate table.

A

less than a pound

B

more than a pound

C

exactly one pound

D

about eight pounds

16

The chart below shows an exchange rate table.

A

1

B

119

C

2

D

121

17

Read this news report about a planned devaluation of the bolivar, the currency of Venezuela.The president of Venezuela announced that the country would be devaluating the bolivar for the fifth time in nine years. The official rate is falling from 4.3 bolivars to the dollar, to 6.3, a 32% devaluation. By increasing the bolivar value of exports of oil to the US and other nations, the government hopes to alleviate a budget crisis caused by its increasing reliance on borrowing to meet spending obligations.In response to the announcement, the people of Venezuela lined up today to buy televisions, electronics, and airline tickets in order to protect themselves from projected price increases.

A

followed the law of supply and demand.

B

allowed the exchange rate to remain unchanged.

C

increased the number of bolivars needed to buy one dollar.

D

decreased the number of bolivars needed to buy one dollar.

18

Which of these statements most accurately describes currencies in North America?

A

All countries in North America use the US dollar.

B

All countries in North America use the euro.

C

North American countries have done away with separate currencies.

D

Each country in North America uses its own currency.

19

The chart below shows an exchange rate table.

A

It would look the same because exchange rate tables do not change.

B

It would look different because exchange rate tables change constantly.

C

It would look different because exchange rate tables change once a month.

D

It would look different because more countries will have started to use euros.

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