#1
Which of the following is a key characteristic of absolute advantage?
The ability to produce a good using fewer resources than another producer.
ExplanationEfficiency in resource utilization.
#2
What does the term 'comparative advantage' refer to in international trade?
The ability of a country to produce a particular good at a lower opportunity cost than another country.
ExplanationLower opportunity cost in production.
#3
Which organization is responsible for setting international trade rules and resolving trade disputes?
World Trade Organization (WTO)
ExplanationGlobal trade governance.
#4
Which theory suggests that a country should specialize in producing goods for which it has the lowest opportunity cost?
Theory of comparative advantage
ExplanationSpecialization based on efficiency.
#5
Which term describes the situation where a country exports more goods and services than it imports?
Trade surplus
ExplanationExcess export over import.
#6
Which of the following is NOT a benefit of international trade?
Reduced competition
ExplanationOpposite of market expansion.
#7
Which of the following is NOT a goal of international trade?
Maximizing imports while minimizing exports
ExplanationContrary to trade balance objectives.
#8
What is the main principle behind the theory of comparative advantage?
Countries should focus on producing goods that they can produce most efficiently relative to other goods.
ExplanationEfficient resource allocation.
#9
What does the Purchasing Power Parity (PPP) theory suggest?
Exchange rates should adjust to ensure that identical goods cost the same in different countries.
ExplanationPricing equality across nations.
#10
What is the primary objective of imposing tariffs on imported goods?
To increase domestic production
ExplanationDomestic industry protection.
#11
What is the main purpose of the balance of payments (BoP) in international economics?
To record all economic transactions between residents and non-residents of a country
ExplanationEconomic transaction tracking.
#12
Which of the following is a feature of a fixed exchange rate system?
Governments intervene to stabilize exchange rates
ExplanationCentralized rate management.
#13
What is the term used to describe the total value of a country's exports minus the total value of its imports?
Trade balance
ExplanationNet trade outcome.
#14
What is the primary function of the International Monetary Fund (IMF)?
To provide loans and financial assistance to countries facing economic difficulties
ExplanationEconomic crisis support.
#15
What is the primary disadvantage of protectionist trade policies such as tariffs and quotas?
They can lead to retaliatory actions from trading partners
ExplanationProvoking trade conflicts.