A

1. Why do individuals exchange goods?

2. What is the essential difference between domestic trade and foreign trade?

3. What is the basis of foreign trade ?

4. What is a "bill of exchange" ?

5. What is a "bill of lading"?

6. Define "par of exchange."

7. How is it determined between any two countries?

8. What persons deal in foreign exchange ?

9. What are "gold points" ?

10. How are these points determined?

11. What cause the rates of exchange to fluctuate?

12. How are these rates restricted by the gold points?

13. Explain "favorable balance of trade"; "unfavorable balance of trade."

14. Is an unfavorable balance of trade necessarily disadvantageous to a country? Why, or why not?

15. How may a country maintain indefinitely an unfavorable balance of trade?

16. How does a country that has no gold mines get its supply of gold coins?

B

1. Examine the articles in your own home or in the schoolroom and try to determine which of them were produced: a. In your own community.

b. In your own state.

c. In the United States.

d. In other American countries.

2. Secure a domestic bill of exchange from some bank.

a. Fill it out as if you had sold a carload of corn to James White, payable in sixty days.

b. What would be the next step in the transaction?

c. How will the bill look after its acceptance by White?

d. Who is likely to hold the bill until it matures?

e. How does the accepted bill differ from a promissory note ?

3. The French monetary unit is the gold franc, containing 4.48 grains of fine gold.

a. How many francs can be coined out of a United States gold dollar?

b. This number represents the "French par of exchange." c. Estimate the gold points.

4. Make a list of transactions coming under your own observation, which would affect the rates of exchange between your community and New York City; the rate of foreign exchange between New York and South America.

C

1. How could each of the following affect the rate of exchange between the United States and England: a. Failure of the wheat crop in the United States?

b. The building of an American merchant marine?

c. The purchase of London city bonds by New York bankers ?

d. The return of British immigrants to the mother country?

e. The decline of gold production in the United States ? in South Africa ?

2. How would the gold points on sterling exchange be affected by: a. Change in the interest rates from 5 to 4 per cent?

b. Improvement in shipbuilding?

c. Establishing aeroplane traffic between the United States and England?

3. Suppose the imports from England exceed our exports to that country. How is this trade condition likely to affect: a. The rate of sterling exchange in New York ?

b. Prices in the United States? in England?

c. Probable future trade movements?

d. Profits of exporters? of importers?

4. It has been proposed that the nations of the world should adopt a uniform currency. How would such a proposal, if carried out, affect: a. Par of exchange?

b. Rates of exchange?

c. Gold points?

d. International trade?

e. Domestic trade ? f. Gold mining?

g. Issue of paper money?

Supplementary Reading

Bullock, Introduction to the Study of Economics, 3d ed., pages 373-410.

Ely, Outlines of Economics, 3d ed., pages 345-367.

Fetter, Economics, Vol. II, pages 185-198.

Johnson, Introduction to Economics, pages 324-347.

Seager, Principles of Economics, pages 865-382.

Seligman, Principles of Economics, 5th ed., pages 587-612.

Taussig, Principles of Economics, 2d ed., Vol. I, pages 480 - 507.