A key reason that our trade deflcits rose in the early 1980s was A) the rise in

Question

A key reason that our trade deflcits rose in the early 1980s was A) the rise in the value of the dollar B) rising tariff barriers in Japan and Korea. C) the worldwide recession. D) inflation. 41. 42. One thing we can do to reduce trade imbalance in the United States would be to A) push down the value of the dollar relative to other currencies. B) raise the prices of U.S. exports. C) raise consumption in the United States D) lower savings in the United States 43. Imports would be lowered by A) tariffs only B) import quotas only C) both tariffs and import quotas. D) neither tariffs nor import quotas. 44. An import quota is A) a tax on imported goods. B) revenue producing for state governments but not the federal government. C) always tied to a foreign nation's trade policies toward American goods sold in that country D) deflationary E) a limit on the quantity o foreign goods that can be sold in a nation's domestic market. During the years 1970-1986, the merchandise balance of trade in the United States shifted from a A) trade deficit to a trade surplus. B) small trade deficit to a large trade surplus. C) trade surplus to a large trade deficit. D) small trade surplus to a large trade surplus. E) large trade surplus to a relatively small trade deficit. 45. 46. When a country exports fewer goods and services than it imports, this is called A) the terms of trade. B) the exchange rate. C) a balance of trade deficit. D) a balance of trade surplus. Page 9

Explanation / Answer

41. A key reason that are trade deficits rose in the early 1980s was the rise in the value of the dollar, which makes imports cheaper and exports more expensive ,that is US industries became less competitive comparatively. Therefore option (A) is correct.

42. One thing we can do to reduce trade imbalance in the United states would be to push down the value of the dollar relative to other currencies. Therefore option (A) is correct.

43. Imports would be lowered by both tariffs and import quotas because both impose the restrictions on imports. Therefore, option (C) is correct.

44. An import quota is a limit on the quantity of the foreign goods that can be sold in a nation's domestic market. Because it set a limit on the quantity of a good that can be imported into a country in a given period of time. Therefore, option(E) is correct.

45. During the years 1970 -1986, the merchandise balance of trade in the United states shifted from a trade deficit to a trade surplus.Therefore option(A) is correct.

46. When a country exports fewer goods and services than it imports,this is called a balance of trade deficit. Because exports is less than imports implies net exports <0 , implies balance of trade is in deficit. Therefore,option (C) is correct.

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