#1
Which of the following best describes 'comparative advantage'?
The ability of a country to produce a good at a lower opportunity cost than another country
ExplanationCountries specialize in producing goods with lower opportunity costs for efficient global trade.
#2
What does GDP stand for?
Gross Domestic Product
ExplanationA measure of a country's economic performance, representing the total value of goods and services produced.
#3
What does the term 'tariff' refer to in international trade?
A tax imposed on imported goods
ExplanationTax on imported goods, often used to protect domestic industries.
#4
In the context of global economics, 'FDI' stands for:
Foreign Direct Investment
ExplanationInvestments made by a person or company in one country in business interests in another.
#5
The term 'globalization' refers to:
The integration of world economies through the reduction of barriers to the movement of trade, capital, technology, and people
ExplanationIncreasing interconnectedness of global economies.
#6
What is the main purpose of the World Bank?
To provide loans and grants for the purpose of reducing global poverty and supporting development
ExplanationFinancial support for development projects and poverty reduction.
#7
Which organization deals with global rules of trade between nations?
World Trade Organization (WTO)
ExplanationWTO oversees international trade agreements, resolves disputes, and promotes free trade.
#8
What is 'protectionism' in the context of international trade?
The use of tariffs, quotas, and other measures to protect a country's domestic industries from foreign competition
ExplanationGovernment policies aimed at shielding domestic industries from foreign competition.
#9
What principle does the 'Bretton Woods System' refer to?
The establishment of fixed exchange rates and the creation of key international financial institutions
ExplanationFixed exchange rates and institutions to stabilize the global economy post-World War II.
#10
Which of the following is a primary aim of the International Monetary Fund (IMF)?
To promote international monetary cooperation
ExplanationIMF works to foster stability and cooperation in the global monetary system.
#11
The 'balance of trade' is defined as the difference between a country's:
Exports and imports of goods and services
ExplanationThe net value of a country's exports and imports.
#12
What concept is described by the 'Law of One Price' in the context of international economics?
The price of a specific good should be the same worldwide when expressed in a common currency
ExplanationUniform pricing for identical goods in a common currency.
#13
The 'Heckscher-Ohlin Model' in international economics proposes that countries will export goods that:
Use their abundant and cheap factor(s) of production more intensively
ExplanationCountries specialize in goods utilizing their abundant and inexpensive production factors.
#14
What does the 'Purchasing Power Parity' (PPP) theory suggest?
Exchange rates should adjust so that identical goods cost the same in each country when priced in the same currency
ExplanationExchange rates should equalize the cost of identical goods in different currencies.
#15
What role does the 'International Trade Centre' (ITC) play in global economics?
Fostering sustainable development through trade and international business development
ExplanationPromoting sustainable development through trade initiatives.
#16
What is 'foreign exchange risk'?
The risk that comes from fluctuations in a currency's value
ExplanationPotential losses due to changes in currency values during international transactions.