#1
Which of the following is an advantage of international trade?
Increased competition leading to lower prices
ExplanationInternational trade fosters competition, resulting in lower prices.
#2
Which international organization facilitates global trade by negotiating and implementing trade agreements?
World Trade Organization (WTO)
ExplanationThe WTO is responsible for regulating and promoting international trade.
#3
What is a trade deficit?
When a country's imports exceed its exports
ExplanationIt occurs when a country buys more goods and services than it sells.
#4
What is the main purpose of a trade embargo?
To restrict or prohibit trade with a particular country
ExplanationEmbargoes are imposed to isolate and economically pressure specific countries.
#5
What is the term for a tax imposed on imported goods?
Tariff
ExplanationTariffs are levied on imports, raising their price to protect domestic industries.
#6
What does 'comparative advantage' refer to in international trade?
A country's ability to produce a good or service at a lower opportunity cost than another country
ExplanationIt denotes a country's efficiency in producing a particular good or service.
#7
Which of the following is NOT a barrier to international trade?
Free trade agreements
ExplanationFree trade agreements facilitate rather than hinder international trade.
#8
What is the balance of trade?
The difference between a country's imports and exports of goods and services
ExplanationIt represents the net value of goods and services traded by a country.
#9
Which economic theory advocates for minimal government intervention in international trade?
Free trade liberalism
ExplanationThis theory supports unrestricted trade, minimizing government involvement.
#10
What is a trade barrier?
A government restriction that impedes trade
ExplanationIt's any measure hindering the free exchange of goods and services.
#11
What does the term 'dumping' refer to in international trade?
Selling goods in a foreign market below their cost of production
ExplanationDumping involves selling goods cheaper abroad than at home, often to gain market share.
#12
What is the Smoot-Hawley Tariff Act known for?
Imposing high tariffs leading to a decline in international trade during the Great Depression
ExplanationIt's notorious for exacerbating the Great Depression by raising trade barriers.
#13
What is the 'most favored nation' principle in international trade?
A commitment to treat all trading partners equally
ExplanationIt ensures that concessions granted to one nation are extended to all.