#1
Which organization sets the rules for international trade?
World Trade Organization (WTO)
ExplanationWTO sets rules for global trade.
#2
What does FOB stand for in international trade?
Free On Board
ExplanationFOB means delivery is free at the port of shipment.
#3
Which of the following is NOT a trade barrier?
Subsidy
ExplanationSubsidy promotes rather than restricts trade.
#4
What does the acronym NAFTA stand for?
North American Free Trade Agreement
ExplanationPromotes trade among North American countries.
#5
Which of the following is a major objective of trade liberalization?
To reduce or eliminate trade barriers
ExplanationAims to foster freer exchange of goods.
#6
What is the term for the difference between a country's total exports and total imports?
Trade deficit
ExplanationExcess of imports over exports.
#7
Which of the following is a tariff barrier to trade?
Embargo
ExplanationEmbargo imposes a total ban on trade.
#8
What is the concept of 'comparative advantage' in international trade?
When a country produces goods at the lowest opportunity cost
ExplanationIt's when a country produces efficiently at lower cost.
#9
What is the main purpose of a letter of credit in international trade?
To ensure prompt payment between buyer and seller
ExplanationSecures payment in trade transactions.
#10
What is the purpose of a bill of lading in international trade?
To acknowledge receipt of goods for shipment
ExplanationProof of receipt and contract of carriage.
#11
Which trade theory suggests that countries should specialize in the production of goods where they possess an absolute advantage?
Theory of Absolute Advantage
ExplanationAdvocates specialization based on outright efficiency.
#12
What is the primary purpose of the General Agreement on Tariffs and Trade (GATT)?
To reduce barriers to international trade
ExplanationAims to lower obstacles to global commerce.
#13
Which theory suggests that countries should specialize in the production of goods in which they have a comparative advantage?
Theory of Comparative Advantage
ExplanationSpecialization based on efficient production.
#14
What is the significance of the Most Favored Nation (MFN) principle in international trade?
It prevents countries from discriminating against one another in trade agreements
ExplanationEnsures equal treatment in trade relations.