#1
Which of the following is a key characteristic of a market economy?
Private ownership of resources and means of production
ExplanationIndividuals and businesses control resources and production.
#2
Which trade theory suggests that countries should specialize in producing goods for which they have the lowest opportunity cost?
Comparative advantage
ExplanationNations should focus on what they can produce most efficiently.
#3
What does the term 'dumping' refer to in international trade?
Exporting goods at prices lower than their production cost
ExplanationSelling goods below cost to gain market share or drive out competitors.
#4
Which economic concept refers to a situation where the prices of goods and services are rising, leading to a decrease in the purchasing power of a currency?
Inflation
ExplanationA general increase in prices and decrease in currency value.
#5
Which international trade theory suggests that countries should focus on exporting goods they are relatively more efficient at producing?
Comparative advantage
ExplanationNations should specialize in areas where they have comparative advantages.
#6
What is the main function of the World Trade Organization (WTO)?
Facilitating international trade negotiations
ExplanationIt helps nations negotiate trade agreements.
#7
In the context of international business, what does FDI stand for?
Foreign Direct Investment
ExplanationInvestments made by multinational corporations in foreign countries.
#8
What is the role of the International Monetary Fund (IMF) in the global economy?
Providing financial assistance to countries facing balance of payments problems
ExplanationIt helps countries deal with financial crises and stabilize their economies.
#9
In the context of foreign exchange, what does the term 'hedging' refer to?
Reducing the risk of currency fluctuations
ExplanationStrategies to minimize losses due to currency value changes.
#10
Which economic system is characterized by both private and government ownership of resources and means of production?
Mixed economy
ExplanationCombines elements of capitalism and socialism.
#11
What is the primary goal of a trade embargo imposed by one country against another?
Exerting economic pressure by restricting trade
ExplanationTo influence policy or behavior through economic sanctions.
#12
Which economic system emphasizes collective or government ownership of resources and central planning?
Socialism
ExplanationResources are owned and controlled by the government or community.
#13
What is the purpose of a Letter of Credit (LC) in international trade?
To facilitate secure payment between buyer and seller
ExplanationIt ensures payment security for international transactions.
#14
What is the primary objective of the General Agreement on Tariffs and Trade (GATT)?
Reducing trade barriers and tariffs
ExplanationPromoting free trade by lowering barriers to commerce.
#15
Which term refers to the legal protection granted to the creator of an original work, such as a book or invention?
Copyright
ExplanationIt grants exclusive rights to creators over their intellectual property.
#16
In the context of international finance, what is the significance of the balance of payments?
Recording all financial transactions between a country and the rest of the world
ExplanationIt tracks a nation's economic transactions with other countries.
#17
What is the purpose of the Organization of the Petroleum Exporting Countries (OPEC)?
Regulating global oil prices
ExplanationTo coordinate oil production and stabilize prices.