Tariffs, quotas, exchange rates and the balance of trade

Grade 12 Social Studies Worksheet

Circle the best answer.

1. Read this first

   Use this

   Exchange rates, 2021 to 2024 (Federal Reserve Board, H.10 exchange rates, read Nov 14, 2026). Columns: Year, Japanese yen per U.S. dollar, U.S. dollars per euro. 2021, 109.77, 1.1834; 2022, 131.46, 1.0538; 2023, 140.49, 1.0817; 2024, 151.46, 1.0818. Each figure is a yearly average of monthly rates. A currency appreciates when it buys more of another currency. Trade also depends on incomes at home and abroad and on how slowly buyers change their orders.

2. 1.

   A machine made in the U.S. keeps a price of $50,000. Bo finds what Japanese buyers pay in 2021 and 2024. Which result is right?

   • About 5.5 million yen in 2021 and 7.6 million in 2024, so Japanese buyers pay 38 percent more
   • About 456 yen in 2021 and 330 yen in 2024, since dollars are divided by the yen rate
   • The same in both years, since its dollar price did not change between 2021 and 2024
   • About 7.6 million yen in 2021 and 5.5 million yen in 2024, so the machine costs Japanese buyers less
3. 2.

   Esme reads the euro column from 2021 to 2022. Which statement does the table support?

   • The euro fell about 11 percent against the dollar; a dollar bought about 12 percent more
   • The dollar and euro each moved about 11 percent, so the two changes are equal
   • The euro appreciated, since 1.0538 dollars is close to one dollar, a stronger position
   • The dollar depreciated about 11 percent against the euro, since the number in the column fell
4. 3.

   A columnist says the weaker yen shows the U.S. trade deficit with Japan must have widened. Jun tests it against the table. What is the verdict?

   • Shown: the dollar appreciated, and an appreciation widens the deficit by definition in the same year
   • Shown: a weaker yen raises U.S. imports from Japan by the same percent as the exchange-rate change
   • Not shown: the table gives rates, and trade balances also depend on incomes and slow orders
   • Not shown: exchange rates do not affect trade, so the table can describe currencies
6. 4.

   Kira compares the tariff line with the quota line. Which statement does the table support?

   • The tariff costs buyers more, since the government keeps $8,000 and under a quota buyers pay nothing extra
   • They give the same price, output and purchases; they differ in who gets the $8,000 gap on 400 imports
   • The quota is cheaper for buyers, since it limits imports directly and does not tax them
   • They differ in imports, since a quota fixes imports at 400 but a tariff lets them fall below 400
7. 5.

   With the straight lines, Luz finds what the $20 tariff costs buyers in lost surplus. Which total is right?

   Use the picture in question 4.

   • About $8,000, the tariff revenue, since buyers lose exactly what the government collects
   • About $20,000, the $20 on the 1,000 bikes, since each buyer pays the higher price
   • About $18,000, the $20 on the 900 bikes alone, since buyers who stop buying lose nothing
   • About $19,000: $20 on the 900 bikes still bought plus a $1,000 triangle
8. 6.

   A speaker says a tariff raises revenue and protects jobs, so it makes the country better off. Noah tests the claim. What is the verdict?

   Use the picture in question 4.

   • Weak: makers and the government gain about $17,000, below buyers' loss of $19,000
   • Strong: revenue and jobs are both gains, and the table shows both for the tariff line
   • Weak: tariffs raise no revenue, since imports fall when the price rises
   • Strong: the tariff earns $8,000, which is more than the $2,000 net loss it causes

9. Output per worker-day in two countries (example figures, made up for practice)

   Country	Bushels of wheat	Bolts of cloth
   Alta	8	4
   Bree	3	2

   A worker-day makes either the wheat or the cloth shown, not both. Absolute advantage means more output per worker-day. Comparative advantage means a lower opportunity cost.

10. 7.

    Alta makes more of both goods. Pia asks whether Alta should also make its own cloth. Which reasoning is best?

    • Neither should trade, since Bree cannot make either good as well as Alta can
    • Alta should make both, since a country that is better at both goods needs no trade
    • Alta should specialize in wheat: a bolt of cloth costs it 2 bushels but Bree just 1.5
    • Alta should specialize in cloth, since its 4 bolts per worker-day are more than Bree's 2
11. 8.

    Alta will buy cloth from Bree for wheat. Ren asks which price of one bolt, in bushels, leaves both better off. Which is it?

    • 1 bushel, which is below both countries' costs, so buyers on both sides gain
    • 2.5 bushels, which is above both countries' costs, so sellers on both sides gain
    • 1.75 bushels, which is above Bree's cost of 1.5 and below Alta's cost of 2
    • 2 bushels, which equals Alta's cost, so both countries are better off at that price
12. 9.

    Bree's wheat farmers ask for a tariff on Alta's wheat. Tala checks the costs in the table. Which statement is best supported?

    • A tariff is wise, since a country should make what it can at home whatever it costs to do so
    • A tariff helps Bree, since Alta makes more wheat per worker-day and so can undersell Bree's farmers
    • It would shield Bree's farmers but block cheaper wheat: Alta gives up 0.5 bolt a bushel, Bree 0.67
    • A tariff changes nothing, since Bree has no comparative advantage in wheat to protect
13. 10.

    A speaker says Bree cannot compete with Alta, so it should not trade. Zee tests the claim. What is the verdict?

    • Supported: a country without an absolute advantage in either good gains nothing from trade
    • Not supported: trade helps just the poorer country, so Alta would be worse off
    • Not supported: Bree has the lower cost of cloth, 1.5 bushels against 2, so trade can help both
    • Supported: Alta makes more wheat and more cloth, so Bree has nothing it can sell to Alta