#1
What is the primary measure of economic activity in a country?
Consumer Price Index (CPI)
Gross Domestic Product (GDP)
Balance of Trade
Unemployment Rate
#2
What is the main objective of a trade barrier?
To promote international cooperation
To increase consumer choices
To restrict foreign competition
To facilitate free trade agreements
#3
Which of the following is NOT a major international financial institution?
International Monetary Fund (IMF)
World Bank
European Central Bank (ECB)
Bank for International Settlements (BIS)
#4
What does the term 'devaluation' refer to in the context of exchange rates?
An increase in the value of a country's currency
A decrease in the value of a country's currency
A fixed exchange rate system
A freely floating exchange rate system
#5
What is the main purpose of a trade embargo?
To encourage international trade
To restrict imports and exports
To promote diplomatic relations
To lower tariffs
#6
What is the purpose of a trade surplus?
To increase imports
To reduce foreign exchange reserves
To promote domestic consumption
To accumulate foreign exchange reserves
#7
Which of the following is NOT a component of the Balance of Payments?
Current Account
Capital Account
Trade Balance
Financial Account
#8
What is the theory that explains exchange rate movements based on differences in interest rates between countries?
Purchasing Power Parity (PPP)
Interest Rate Parity (IRP)
International Fisher Effect (IFE)
Monetary Approach to Exchange Rates
#9
Which organization oversees the World Trade Organization (WTO) agreements?
International Monetary Fund (IMF)
United Nations (UN)
World Bank
General Agreement on Tariffs and Trade (GATT)
#10
What is the name of the international organization that serves as a lender of last resort to countries facing balance of payments problems?
International Monetary Fund (IMF)
World Bank
Bank for International Settlements (BIS)
Asian Development Bank (ADB)
#11
What is the main purpose of the Marshall-Lerner condition in international economics?
To measure a country's inflation rate
To determine the effectiveness of exchange rate depreciation on trade balance
To assess a country's fiscal policy
To analyze the impact of interest rate changes on exchange rates
#12
What does the term 'capital flight' refer to in international economics?
A sudden increase in foreign direct investment
An outflow of financial assets from a country
A government policy to restrict capital flows
A decrease in interest rates
#13
Which of the following is NOT a determinant of exchange rates?
Inflation rate
Interest rate
Government budget deficit
Trade balance
#14
Which of the following best describes a currency peg?
A country fixes its exchange rate to another currency
A country allows its currency to freely float in the market
A country uses its currency as a medium of exchange in international trade
A country's currency is backed by a commodity like gold
#15
Under a system of flexible exchange rates, what determines the exchange rate?
Central bank interventions
International trade flows
Government fiscal policy
Market supply and demand
#16
What is a trade surplus?
When a country exports more goods than it imports
When a country imports more goods than it exports
When a country has a deficit in its balance of trade
When a country's currency is overvalued
#17
Which economic theory suggests that a country should specialize in producing goods for which it has a comparative advantage?
Mercantilism
Absolute Advantage
Comparative Advantage
Factor Proportions Theory
#18
Which economic theory suggests that a country should aim to maintain a trade balance by adjusting its exchange rate?
Purchasing Power Parity (PPP)
Interest Rate Parity (IRP)
Balance of Payments (BOP)
J-Curve Theory
#19
What is the term used to describe a situation where a country's currency is worth less compared to another country's currency?
Revaluation
Depreciation
Appreciation
Devaluation
#20
Which economic theory suggests that a country should intervene in currency markets to maintain a desired exchange rate?
Monetary Approach to Exchange Rates
Interest Rate Parity
Purchasing Power Parity
International Fisher Effect