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CSET Business - International Economics Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Page 1

Question 1 1.

Assume the following exchange rates:

1 Dollar = 102 Japanese Yen

1 Dollar = 0.6 British Pound

1 Dollar = 0.91 Swiss Franc

1 Dollar = 13 Pesos

Which of the following is the least amount of money?

Question 2 2. When countries specialize in the goods in which they have a comparative advantage, which of the following is true?

Question 3 3. All of the following are types of exchange rates that countries can use, except:

Question 4 4. What would you expect if there is an increase in exchange rate?

Question 5 5. Which of the following is FALSE concerning trade?

Page 2

Question 6 6. Why did the U.S. trade deficit start to grow in the 1990s?

Question 7 7. Why does Saudi Arabia have a large trade surplus?

Question 8 8. _____ are goods that are produced in a home country, but sold to foreign countries.

Question 9 9. Why is the balance of payments useful for understanding the state of the economy?

Question 10 10. How do quotas and tariffs impact the supply of goods available to consumers and domestic prices in general?

Page 3

Question 11 11. Which of the following does NOT impact the trade balance of a country?

Question 12 12. Which exchange rate would most likely be used for a good or service that will be delivered at a future date?

Question 13 13. Deduce the effects of having a higher exchange rate for the U.S. dollar on foreign currencies and imports.

Question 14 14. When are exchange rates determined by demand and supply forces?

Question 15 15. What is most likely to happen with a strong dollar?

Page 4

Question 16 16. If a high tariff is imposed on a specific brand of handbags coming from France, what is a likely effect of this action?

Question 17 17. When the American dollar buys more than its equivalent in another currency, it is considered to be _____ the other currency.

Question 18 18. A _____ is a tax imposed by the government on imports coming into a country.

Question 19 19. Which of the following is NOT a component of the current account?

Question 20 20. The United States can produce 20 strawberries or 80 apples, while Canada can produce 15 strawberries or 5 apples. Which of the following describes what will happen if these two countries trade with each other?

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Question 21 21. Which two components make up the balance of payments account?

Question 22 22. According to the two production possibility curves shown, Country A should specialize in the production of which of the following?

Question 23 23. Country A's opportunity cost of producing 1 ton of corn is 5 tons of wheat, while Country B's opportunity cost of producing 1 ton of corn is 1/3 of a ton of wheat. Which of the following statements is true?

Question 24 24. If U.S. exports to Japan increased, what most likely happened?

Question 25 25. Why can the currency exchange rate have a large impact on the trade balance?

Page 6

Question 26 26. What is the rate at which one currency is converted in another called?

Question 27 27. Which of the following statements is true?

Question 28 28. An increase in the value of a domestic currency will mainly affect _____.

Question 29 29. What are goods that are produced in a foreign country but sold in a home country called?

Question 30 30. If a country had $1 million in exports and $1.5 million in imports, what would the trade balance be?

CSET Business - International Economics Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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