#1
Which of the following is a key component of international trade?
Comparative advantage
ExplanationFocuses on producing goods where opportunity cost is lowest.
#2
Which of the following represents a country's current account balance?
Investment income plus transfers
ExplanationSum of trade balance, net income from abroad, and net current transfers.
#3
What is the purpose of a 'balance of payments'?
To track all financial transactions between a country and the rest of the world
ExplanationRecords all economic transactions between a country and others.
#4
What is the primary objective of trade liberalization?
To reduce government intervention in trade
ExplanationAims to decrease barriers like tariffs and quotas.
#5
What is the term for the difference between a country's total exports and total imports?
Trade balance
ExplanationNet value of a country's exports and imports.
#6
Which trade policy seeks to restrict the flow of certain goods or services into a country?
Protectionism
ExplanationAims to shield domestic industries from foreign competition.
#7
What is a 'trade deficit'?
A situation where a country imports more than it exports
ExplanationOccurs when imports exceed exports in value.
#8
What is the primary goal of a trade embargo?
To limit or prohibit trade with a particular country
ExplanationRestricts commerce with a specific nation for political reasons.
#9
What is the term for the total value of a country's exports minus the total value of its imports?
Trade surplus
ExplanationExcess of exports over imports in monetary terms.
#10
What is the purpose of a 'trade agreement'?
To reduce or eliminate trade barriers between participating countries
ExplanationAims to enhance economic cooperation by lowering trade barriers.
#11
What is the term for a situation where a country exports more goods and services than it imports?
Trade surplus
ExplanationPositive balance of trade, where exports exceed imports.
#12
What does the term 'tariff' refer to in international trade?
A tax imposed on imports or exports
ExplanationA government tax on goods entering or leaving the country.
#13
Which international organization is primarily responsible for overseeing trade agreements?
World Trade Organization (WTO)
ExplanationEnsures countries abide by global trade rules.
#14
What is the concept of 'dumping' in international trade?
Exporting goods below their production cost to gain market share
ExplanationSelling goods abroad at lower prices than in the domestic market.
#15
Which of the following is a non-tariff barrier to trade?
Quotas
ExplanationLimits on the quantity or value of goods that can be traded.
#16
What is the main function of the International Monetary Fund (IMF) in the context of international trade?
Providing financial assistance to countries facing balance of payments problems
ExplanationOffers loans to countries experiencing currency or financial crises.
#17
Which economic theory suggests that countries should specialize in producing goods for which they have a comparative advantage?
Comparative advantage
ExplanationNations focus on products they can produce most efficiently.
#18
Which organization primarily deals with trade disputes between member countries?
World Trade Organization
ExplanationResolves disagreements concerning international trade agreements.
#19
Which of the following is NOT a characteristic of free trade?
Government subsidies for domestic industries
ExplanationContrary to free trade principles, involves state support for local businesses.
#20
What is the primary objective of the General Agreement on Tariffs and Trade (GATT)?
To reduce tariffs and trade barriers
ExplanationAims to lower obstacles to international commerce.
#21
Which of the following is NOT a measure of protectionism?
Dumping
ExplanationContrary to protectionism, involves selling goods below cost in foreign markets.
#22
What is the J-curve effect in the context of a country's trade balance?
A temporary worsening of the trade balance before it improves after a currency depreciation
ExplanationTrade balance initially worsens before recovering after currency depreciation.
#23
Which of the following trade theories emphasizes the importance of economies of scale?
New trade theory
ExplanationHighlights the role of economies of scale and product differentiation.
#24
Which trade theory suggests that countries tend to export goods that intensively use factors of production that are locally abundant?
Heckscher-Ohlin model
ExplanationPredicts trade patterns based on resource endowments.