#1
Which of the following is an example of a tariff barrier in international trade?
Import duty
ExplanationA tax levied on imported goods to make them more expensive and less competitive in the domestic market.
#2
What is the main purpose of comparative advantage in international trade?
To minimize opportunity cost
ExplanationCountries specialize in producing goods where they have the lowest opportunity cost, maximizing overall efficiency.
#3
Which of the following is NOT a potential benefit of international trade?
Cultural homogenization
ExplanationInternational trade may increase diversity, but it doesn't necessarily homogenize cultures.
#4
What does the term 'dumping' refer to in the context of international trade?
Selling goods in foreign markets at a lower price than in the domestic market
ExplanationExporting goods below cost or below the home market price, often to gain market share.
#5
Which of the following is an example of a non-tariff barrier to international trade?
Value-added tax (VAT)
ExplanationIndirect tax levied on goods and services at each stage of production or distribution.
#6
Which theory of international trade emphasizes the importance of factor endowments?
Heckscher-Ohlin Theory
ExplanationCountries specialize in producing goods that use resources they possess in abundance.
#7
What is the main reason behind the adoption of protectionist policies in international trade?
To protect domestic industries
ExplanationTo shield domestic industries from foreign competition, often through tariffs, quotas, or subsidies.
#8
Which international trade theory suggests that countries should specialize in producing goods for which they have the lowest opportunity cost?
Theory of Comparative Advantage
ExplanationCountries benefit by focusing on what they do best relative to other countries.
#9
What is the primary objective of trade liberalization policies?
To reduce trade barriers
ExplanationTo promote free trade by removing tariffs, quotas, and other restrictions.
#10
Which international organization promotes free trade by negotiating and enforcing trade agreements among member countries?
World Trade Organization (WTO)
ExplanationGlobal organization overseeing rules of trade between nations, ensuring fairness and predictability.
#11
According to the theory of absolute advantage, who gains from international trade?
All participating countries
ExplanationCountries specialize in producing goods they're most efficient at, leading to gains for all involved.
#12
In the context of international trade, what does the term 'terms of trade' refer to?
The prices of a country's exports relative to its imports
ExplanationThe ratio of export prices to import prices, indicating a country's trade competitiveness.
#13
Which economic concept refers to the difference between a country's total exports and imports?
Current account balance
ExplanationA country's balance of trade plus net income and direct payments.
#14
According to the principle of absolute advantage, what should countries specialize in?
Producing goods with the lowest opportunity cost
ExplanationCountries should focus on producing goods where they have an absolute efficiency advantage.
#15
Which of the following is NOT a potential consequence of globalization on international trade?
Greater cultural diversity
ExplanationWhile globalization can enhance cultural exchange, it may also lead to cultural homogenization.