#1
Which organization sets global rules for international trade?
World Trade Organization (WTO)
ExplanationEstablishes regulations and agreements governing international trade.
#2
What is the main goal of protectionist trade policies?
To protect domestic industries
ExplanationAims to shield domestic businesses from foreign competition.
#3
What is the main purpose of a trade bloc?
To promote economic integration among member states
ExplanationAims to foster closer economic ties and collaboration within a group of nations.
#4
What is the purpose of trade liberalization?
To reduce barriers to trade and promote free trade
ExplanationSeeks to remove obstacles hindering the flow of goods and services between nations.
#5
Which of the following is NOT a factor affecting a country's comparative advantage in international trade?
Government regulations
ExplanationWhile regulations influence trade, they aren't a direct determinant of comparative advantage.
#6
Which of the following is NOT a typical trade barrier?
Subsidies
ExplanationSubsidies typically encourage rather than restrict trade.
#7
What is the economic theory that suggests a country should specialize in producing goods/services where it has a comparative advantage?
Comparative advantage theory
ExplanationAdvocates for focusing on areas of comparative strength for efficient trade.
#8
What is the 'Most Favored Nation' principle in international trade?
Treating all trading partners equally
ExplanationEnsures non-discriminatory treatment among trading partners.
#9
Which of the following is NOT a method used to measure trade balance?
Trade integration
ExplanationTrade integration refers to the degree of interconnectedness, not balance.
#10
Which of the following trade policies aims to protect infant industries?
Import substitution
ExplanationEncourages domestic production by substituting imports with locally made goods.
#11
Which trade agreement is known as the North American Free Trade Agreement?
NAFTA
ExplanationPromoted free trade among North American countries.
#12
What is the primary objective of a currency devaluation in the context of international trade?
To reduce the cost of imports and boost exports
ExplanationIntended to make exports cheaper and imports costlier, thereby improving trade balance.
#13
Which of the following is an example of a non-tariff barrier to trade?
Import quotas
ExplanationRestricts the quantity of imports, unrelated to tariffs.
#14
What is the Smoot-Hawley Tariff Act known for?
It increased tariffs and exacerbated the Great Depression
ExplanationInfamous for escalating trade barriers and worsening economic downturn.
#15
Which of the following is an example of a trade remedy measure?
Anti-dumping duties
ExplanationImposed to counteract unfair trade practices such as dumping.