Question

16. A country has an economic boom and can afford to increase imports from a second country. What is likely to happen in the second country?

a. a recession
b. an economic boom
c. a depression
d. increased taxes

17. The United States signs a free trade agreement with another country that has dramatically different resources. How would this trade treaty affect the United States?
a. Businesses will most likely not offer a variety of products.
b. Consumers will face higher prices as trade deficits increase.
c. Industries will increasingly focus on using interdependence.
d. Producers will be put out of business as more interesting products enter the mark

Answer 1

#16. The second country would experience a boom because someone else is buying from them.

#17. Because Free Trade means what it says, other countries trade with little to no taxes being paid from their pary. Because the other country has something we do not have, we must pay for it. This cost will be sent down to the consumers. So, the US ends up paying for the resources and then the consumer pays for the resources. If we have nothing to trade with, we reach a deficit with this trade. "B" would be the answer.