#1
Which of the following is an example of a trade barrier?
Tariff
ExplanationTax on imported goods
#2
What is the 'Most Favored Nation' principle in international trade?
A country treating all its trading partners equally
ExplanationGranting the best trade terms to all nations
#3
In the context of international trade, what is 'trade liberalization'?
The process of reducing or eliminating trade restrictions
ExplanationOpening markets to free trade
#4
What is the 'balance of payments' in international trade?
The difference between a country's exports and imports of goods and services
ExplanationRecords financial transactions with other countries
#5
What does the term 'Dumping' refer to in international trade?
Selling goods below cost in a foreign market
ExplanationSelling products at a loss to gain market share
#6
Which organization facilitates international trade negotiations and dispute resolution?
World Trade Organization (WTO)
ExplanationRegulates global trade rules and settles disputes
#7
What is the main purpose of import tariffs?
To generate revenue for the government
ExplanationSource of government income on imports
#8
Which economic theory emphasizes the importance of a nation's comparative advantage in international trade?
Classical liberalism
ExplanationFocuses on specialization and efficiency
#9
How does a currency devaluation affect a country's exports and imports?
It boosts exports and reduces imports
ExplanationMakes exports cheaper and imports costlier
#10
What is the role of the International Monetary Fund (IMF) in the context of international trade?
To provide financial assistance to countries facing balance of payments problems
ExplanationOffers loans to countries with trade deficits
#11
What is the purpose of a free trade agreement (FTA)?
To reduce or eliminate trade barriers between participating countries
ExplanationPromotes free flow of goods and services
#12
How does a trade surplus impact a country's economy?
It strengthens the country's currency
ExplanationIncreases foreign currency reserves
#13
What is a trade deficit, and how does it impact a country's economy?
Excess of imports over exports, potentially impacting the currency value
ExplanationNegative balance in trade leading to currency depreciation
#14
What is the 'Laffer Curve' in the context of international trade?
A graphical representation of the relationship between tax rates and government revenue
ExplanationIllustrates optimal tax rates
#15
What is the 'Smoot-Hawley Tariff Act,' and what impact did it have on international trade during the Great Depression?
A tariff act that raised duties on thousands of imported goods, worsening the global economic downturn
ExplanationIntensified trade barriers, exacerbating economic crisis
#16
What is the primary goal of the General Agreement on Tariffs and Trade (GATT)?
To reduce trade barriers and promote international trade
ExplanationFacilitates negotiations for trade liberalization