#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
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.
#7
Which international organization is primarily responsible for overseeing trade agreements?
World Trade Organization (WTO)
ExplanationEnsures countries abide by global trade rules.
#8
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.
#9
Which of the following is a non-tariff barrier to trade?
Quotas
ExplanationLimits on the quantity or value of goods that can be traded.
#10
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.
#11
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.
#12
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.
#13
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.