1 A country's ability to produce more of a given product than another country is known as _______.A) international advantage B) relative advantage C) comparative advantage D) absolute advantage 2 An example of a service that is exchanged internationally is ______.A) bananas B) coffee beans C) banking D) raw materials 3 If a country can produce a particular product at a lower opportunity cost than another country, it has a(n) ______.A) better climate B) larger labor force C) comparative advantage D) absolute advantage 4 A provision allowing a country to receive the same tariff reduction that the United States negotiates with a third country is called _____.A) North American Free Trade Agreement (NAFTA) B) World Trade Organization (WTO) C) most favored nation clause D) balance of payments 5 The difference between the money a country pays out to, and receives from, other nations when it engages in international trade is a/an ______.A) infant industries argument B) balance of payments C) most favored nation clause D) North American Free Trade Agreement (NAFTA) 6 An agreement to liberalize free trade by reducing tariffs among three major trading partners: Canada, Mexico, and the United States is called _______.A) North American Free Trade Agreement (NAFTA) B) World Trade Organization (WTO) C) free traders D) most favored nation clause 7 Which of the following is NOT a barrier to international trade?A) most favored nation clauses B) rigorous health inspections C) requiring import licenses D) prohibiting genetically altered crops 8 All the following is true of fixed exchange rates EXCEPT _____.A) one currency is fixed in terms of another B) the exchange rate does not change C) supply and demand determine currency's value D) gold was once the common denominator 9 Under a flexible exchange rates system, excessive imports cause the value of the dollar to ______.A) rise, making imports cost more B) decline, making imports cost more C) decline, making exports cost more D) rise, making exports cost less 10 Which of the following terms is CORRECTLY defined?A) trade deficit – spending on imports is less than revenue from exports B) trade surplus – revenue from exports is less than spending on imports C) flexible exchange rates – rates established by supply and demand D) floating exchange rates – rates remain fixed in relation to one another