#1
Which of the following is a benefit of international trade?
Increased competition
ExplanationBoosts competition, fostering innovation and efficiency.
#2
What is the purpose of a trade surplus?
To promote economic growth
ExplanationBoosts GDP and national wealth through increased exports.
#3
What is the purpose of a trade barrier?
To restrict or limit international trade
ExplanationIntended to shield domestic industries from foreign competition.
#4
What is the term for a situation where a country exports more goods than it imports?
Trade surplus
ExplanationOccurs when exports exceed imports, resulting in positive balance.
#5
What is a trade deficit?
When a country imports more than it exports
ExplanationResults from spending more on imports than earning from exports.
#6
What is the main function of the World Trade Organization (WTO)?
To facilitate international trade negotiations
ExplanationAims to negotiate trade agreements and resolve disputes.
#7
In the context of exchange rates, what does 'appreciation' mean?
Increase in the value of one currency relative to another
ExplanationWhen one currency becomes stronger compared to others.
#8
Which organization is responsible for issuing the world's primary reserve currency?
International Monetary Fund (IMF)
ExplanationIMF manages the reserve currency (SDR) and provides financial stability.
#9
Which exchange rate system involves a fixed exchange rate but allows for occasional adjustments?
Managed float
ExplanationFixes rates but permits central bank interventions.
#10
Which international trade agreement is known for reducing barriers to trade in goods and services?
GATT
ExplanationFocused on lowering tariffs and promoting trade liberalization.
#11
Which economic theory suggests that a country should specialize in producing goods and services that it can produce most efficiently?
Comparative advantage
ExplanationEmphasizes efficiency by specializing in competitive advantages.
#12
What is a 'floating exchange rate'?
A system where exchange rates are determined by market forces
ExplanationExchange rates fluctuate freely based on supply and demand.
#13
What is the significance of the Marshall-Lerner condition in international trade?
It assesses the impact of exchange rate changes on trade balance
ExplanationDetermines if a currency devaluation improves trade balance.
#14
Which economic indicator reflects the total value of a country's exports minus the total value of its imports?
Trade balance
ExplanationRepresents the difference between exports and imports.
#15
What is the primary objective of the General Agreement on Tariffs and Trade (GATT)?
To reduce barriers to international trade
ExplanationAims to promote free trade by lowering trade barriers.