12th grade Tariffs, quotas, exchange rates and the balance of trade worksheet

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 gain 100 more bikes made, while buyers pay $20 more and buy 100 fewer
   • 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 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.

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

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

5. 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.

6. 4.

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

   • Nothing happened to the dollar, since the dollar prices of the goods did not change
   • 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
7. 5.

   Luz finds the price of the U.S. bike in yen for a Japanese buyer. Which statement is right?

   • It stays at 100,000 yen, since the dollar price of the bike did not change
   • It rises from 100,000 yen to 125,000 yen, so fewer Japanese buyers will likely buy
   • It falls from 125,000 yen to 100,000 yen, so more Japanese buyers are likely to buy it
   • It rises to 125,000 yen, so more Japanese buyers choose it because it costs more
8. 6.

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

   • It rises from $100 to $125, since the number of yen per dollar went up by 25
   • It falls from $100 to $80, so U.S. buyers are likely to buy more of it
   • 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. 7.

   A student says a stronger dollar is good because everything gets cheaper for Americans. Noah tests it. What is the best reply?

   • False: exchange rates have no effect on the prices that buyers pay for goods
   • True: a stronger dollar lowers the cost of each good, so Americans gain
   • False: a stronger dollar raises the price of imports as well as the price of exports
   • Half true: imports cost Americans less, but U.S. goods cost more abroad

10. 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.

11. 8.

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

    • Norden has a $350 billion deficit, the size of its imports, and Brava has a surplus
    • Both countries have surpluses, since each country exports many billions of dollars
    • Norden has a $50 billion deficit and Brava has a $50 billion surplus
    • Brava has a $50 billion deficit and Norden has a $50 billion surplus
12. 9.

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

    • Imports rising by $30 billion with exports unchanged, because more goods help the economy
    • Exports rising by $30 billion with imports unchanged
    • Exports and imports both rising by $30 billion, because both sides of trade grow together
    • 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 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
    • It tends to narrow: its exports cost foreign buyers less and its imports cost its buyers more