#1
Which of the following is a consequence of a trade deficit?
Increased foreign borrowing
ExplanationTrade deficit requires borrowing to finance excess imports.
#2
Which term describes a situation where a country exports more goods and services than it imports?
Trade surplus
ExplanationTrade surplus occurs when exports exceed imports.
#3
What is the purpose of a trade barrier?
To restrict trade between countries
ExplanationIt's meant to limit the flow of goods and services across borders.
#4
Which organization oversees international trade agreements and disputes?
World Trade Organization
ExplanationThe WTO acts as a global trade referee and facilitator.
#5
What does the term 'dumping' refer to in the context of international trade?
Exporting goods below their production cost
ExplanationSelling goods abroad at a price below their cost.
#6
Which of the following is NOT a method to reduce a trade deficit?
Implementing tariffs
ExplanationTariffs are more likely to worsen a trade deficit.
#7
Which economic indicator is used to measure the value of a country's total exports minus its total imports?
Balance of Trade
ExplanationIt calculates the net value of a country's trade activities.
#8
What is the effect of a strong domestic currency on a country's exports?
Exports decrease
ExplanationStronger currency makes exports more expensive.
#9
What is the purpose of a trade deficit?
To finance imports with exports
ExplanationDeficits are covered by borrowing or using reserves.
#10
Which of the following is a consequence of a trade surplus?
Appreciation of the domestic currency
ExplanationSurpluses tend to strengthen a country's currency.
#11
Which theory suggests that countries should specialize in the production of goods and services in which they have a comparative advantage?
Theory of Comparative Advantage
ExplanationCountries should focus on what they do best, according to this theory.
#12
What is a 'current account deficit'?
When a country imports more goods and services than it exports
ExplanationIt's when a country's imports exceed its exports.
#13
What is a 'tariff' in international trade?
A tax on imported goods
ExplanationIt's a tax imposed on imports to raise their price.
#14
What is the purpose of a 'balance of payments'?
To monitor a country's overall economic health
ExplanationIt tracks all international transactions to assess economic stability.
#15
What is the 'terms of trade'?
The ratio of export prices to import prices
ExplanationIt measures the purchasing power of a country's exports.
#16
What is the main purpose of a trade surplus?
To strengthen the domestic currency
ExplanationSurpluses can boost a nation's currency value.
#17
Which of the following is an example of a non-tariff barrier to trade?
Import quotas
ExplanationQuotas limit the quantity of imports without a tariff.
#18
What is the primary goal of a trade agreement?
To facilitate international trade
ExplanationTrade agreements aim to ease trade barriers.
#19
Which economic theory suggests that a country should specialize in the production of goods for which it has a comparative advantage?
Theory of Comparative Advantage
ExplanationCountries should focus on what they do best, according to this theory.
#20
What is a 'trade surplus'?
When a country exports more goods and services than it imports
ExplanationIt's the positive difference between exports and imports.
#21
Which of the following is NOT a factor contributing to economic imbalances in international trade?
Technological advancements
ExplanationTechnological advancements typically promote trade efficiency.
#22
Which economic theory advocates for government intervention to maintain trade surpluses?
Mercantilism
ExplanationMercantilism prioritizes export promotion and import restriction.
#23
Which international trade agreement seeks to promote economic integration among its member states?
European Union (EU)
ExplanationThe EU aims for economic cooperation and integration.
#24
Which economic concept describes the tendency of a country to specialize in producing goods and services for which it has a comparative advantage?
Comparative advantage
ExplanationIt's about focusing on what a country does best.