22. What role does the Federal Reserve play in regulating the banking system?
a. A member from the Federal Reserve works at the headquarters of each national bank.
b. The Federal Reserve coordinates all regulatory activities and examines banks periodically.
c. The Federal Reserve must approve every major transaction of a bank.
d. The Federal Reserve becomes involved only when there is a major problem in a bank.
23. The law of comparative advantage states that a nation is better off when it produces goods and services for which it has the comparative advantage. How is a comparative advantage obtained?
a. by increasing the amount of goods that are traded
b. by producing only products with a high demand value
c. by limiting trade to nonrenewable products
d. by producing a product with a lower opportunity cost
29. Which statement best describes the current status of the United States as an exporter and importer?
a. The United States is the leading importer of goods but lags in exports.
b. The United States is the world’s leading importer and exporter.
c. The United States is the second-largest importer and the world’s leading exporter.
d. The United States is the leading importer, and China is the leading exporter.
33. How do tariffs work to protect infant industries?
a. They reduce sales taxes for introductory products.
b. They shield new industries in the early stages of their development from the competition of more mature rivals.
c. They raise the trade barriers for imports of child-care products.
d. They increase competition for a new business, forcing it to be more productive.
35. When a nation’s currency appreciates, how is trade with other countries affected?
a. The nation’s products become more expensive in other countries.
b. The price of foreign products increases.
c. The nation’s products become less expensive in other countries.
d. Protective tariffs come into effect to protect the prices of products.
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