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?

   • No one loses, since the government collects the tariff and spends it for the public
   • Buyers gain, since the price of $120 pays for more bikes made at home for them
   • Home makers gain 100 more bikes made, while buyers pay $20 more and buy 100 fewer
   • Home makers lose, since imports fall from 600 to 400 and so they sell fewer bikes
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
   • $2,000: $20 on each of the 100 bikes that buyers give up after the tariff
   • $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
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 raises it, since more bikes are made at home and so more bikes are bought at home
   • It lowers it, from 1,000 to 900: the price is higher, so buyers cut back
   • It lowers it, from 1,000 to 400, since just home-made bikes are bought after a tariff
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 the price rose, since the table lists the world price for both lines
   • Whether home makers made more, since the table gives production for free trade alone
   • Whether imports fell, since the table gives just the home figures for each line
   • Whether makers' gain is worth what buyers lose: they pay more on each of 900 bikes

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 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
   • The dollar appreciated: it buys 125 yen in year 2, up from 100 in year 1
   • The yen appreciated, since it takes more yen to buy a dollar in the second year
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 stays at $100, since the camera still costs 10,000 yen in both years
   • 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

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?

    • Brava has a $50 billion deficit and Norden has a $50 billion surplus
    • Both countries have surpluses, since each country exports many billions of dollars
    • Norden has a $350 billion deficit, the size of its imports, and Brava has a surplus
    • Norden has a $50 billion deficit and Brava has a $50 billion 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 rising by $30 billion with imports unchanged
    • Exports and imports both rising by $30 billion, because both sides of trade grow together
    • 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 tends to narrow: its exports cost foreign buyers less and its imports cost its buyers more
    • It tends to widen: Norden's exports cost foreign buyers more and its imports cost Norden's buyers less
    • It does not change: a currency's value affects the price of money, not the price of traded goods
    • It disappears at once: a depreciation turns a deficit into a surplus in the same year