Tariffs, quotas, exchange rates and the balance of trade

Grade 12 Social Studies Worksheet - Building Confidence

Circle the best answer.

2. 1.

   Ari compares the two lines. Which statement does the table support?

   • Home makers lose, since imports fall from 600 to 400 and so they sell fewer bikes
   • Home makers gain 100 more bikes made, while buyers pay $20 more and buy 100 fewer
   • Buyers gain, since the price of $120 pays for more bikes made at home for them
   • No one loses, since the government collects the tariff and spends it for the public
3. 2.

   Bo asks how much revenue the $20 tariff raises. Which answer fits the table?

   Use the picture in question 1.

   • $8,000: $20 on each of the 400 bikes still imported
   • $12,000: $20 on each of the 600 bikes that were imported before the tariff
   • $20,000: $20 on each of the 1,000 bikes that were bought at home before
   • $2,000: $20 on each of the 100 bikes that buyers give up after the tariff
4. 3.

   Does the tariff raise or lower the number of bikes bought at home? Esme gives a reason. Which one is right?

   Use the picture in question 1.

   • It stays the same, since imports fall by as much as home production rises
   • It lowers it, from 1,000 to 400, since just home-made bikes are bought after a tariff
   • It lowers it, from 1,000 to 900: the price is higher, so buyers cut back
   • It raises it, since more bikes are made at home and so more bikes are bought at home
5. 4.

   A union says the tariff protects 100 bikes of home work (400 to 500). Jun asks what the table leaves out. Which is it?

   Use the picture in question 1.

   • Whether makers' gain is worth what buyers lose: they pay more on each of 900 bikes
   • Whether home makers made more, since the table gives production for free trade alone
   • Whether the price rose, since the table lists the world price for both lines
   • Whether imports fell, since the table gives just the home figures for each line

6. Read this first

   Use this

   The dollar and the yen (example figures, made up for practice). Columns: Year, Yen per dollar, A U.S. bike costs, A Japanese camera costs. 1, 100, $1,000, 10,000 yen; 2, 125, $1,000, 10,000 yen. Prices in each country's own money do not change. The dollar appreciates when it buys more yen.

7. 5.

   Kira compares year 1 with year 2. Which statement about the dollar is supported?

   • The yen appreciated, since it takes more yen to buy a dollar in the second year
   • The dollar appreciated: it buys 125 yen in year 2, up from 100 in year 1
   • The dollar depreciated, since 125 is a bigger number than 100 and so it buys more
   • Nothing happened to the dollar, since the dollar prices of the goods did not change
8. 6.

   Milo finds the price of the Japanese camera in dollars. Which statement is right?

   • It falls from $100 to $80, so U.S. buyers are likely to buy more of it
   • It rises from $100 to $125, since the number of yen per dollar went up by 25
   • It falls from $100 to $75, since the yen lost a quarter of its dollar value
   • It stays at $100, since the camera still costs 10,000 yen in both years

9. Use this

   Two example countries' trade (example figures, made up for practice). Columns: Country, Exports, Imports. Norden, $300 billion, $350 billion; Brava, $500 billion, $450 billion. The trade balance is exports minus imports. A deficit means imports are larger than exports; a surplus means exports are larger.

10. 7.

    Pia reads the balance for each country. Which statement is right?

    • Norden has a $50 billion deficit and Brava has a $50 billion surplus
    • Both countries have surpluses, since each country exports many billions of dollars
    • Brava has a $50 billion deficit and Norden has a $50 billion surplus
    • Norden has a $350 billion deficit, the size of its imports, and Brava has a surplus
11. 8.

    A reporter says Norden's deficit proves its economy is failing. Ren tests the claim. What is the best verdict?

    • Shown: imports above exports shrink a country's output by the same $50 billion each year
    • Not shown: a deficit means imports exceed exports; the table says nothing about jobs or growth
    • Shown: a deficit means the country loses money each year, and Norden loses $50 billion
    • Not shown: a deficit cannot occur in a country with a growing economy, so Norden must be shrinking
12. 9.

    Tala asks which change would cut Norden's deficit to $20 billion. Which one does?

    • Exports and imports both rising by $30 billion, because both sides of trade grow together
    • Exports rising by $30 billion with imports unchanged
    • Imports rising by $30 billion with exports unchanged, because more goods help the economy
    • Exports falling by $30 billion with imports unchanged, because that shrinks the deficit's size
13. 10.

    Norden's currency depreciates. Zee predicts what tends to happen to its deficit. Which prediction is best?

    • It disappears at once: a depreciation turns a deficit into a surplus in the same year
    • It does not change: a currency's value affects the price of money, not the price of traded goods
    • It tends to widen: Norden's exports cost foreign buyers more and its imports cost Norden's buyers less
    • It tends to narrow: its exports cost foreign buyers less and its imports cost its buyers more