#1
According to the theory of comparative advantage, a country should specialize in producing goods for export based on which principle?
The absolute superiority of its technology.
The relative opportunity cost of production.
The level of government subsidies available.
The quantity of capital available.
#2
Which organization oversees international trade negotiations and dispute resolution?
World Trade Organization (WTO)
International Monetary Fund (IMF)
Organization for Economic Cooperation and Development (OECD)
United Nations Conference on Trade and Development (UNCTAD)
#3
Which trade theory suggests that countries should specialize in the production of goods for which they have an absolute advantage?
Heckscher-Ohlin model
New trade theory
Comparative advantage theory
Mercantilism
#4
What is the main objective of trade liberalization?
To increase barriers to trade
To promote protectionism
To reduce or eliminate barriers to trade
To decrease international cooperation
#5
Which trade theory suggests that countries should focus on producing and exporting goods that intensively use factors of production that are locally abundant and cheap?
Heckscher-Ohlin model
Mercantilism
New trade theory
Factor proportions theory
#6
Which of the following is a fundamental assumption of the classical theory of international trade?
Perfect competition prevails in all markets.
Countries engage in trade due to differences in technology.
Factor mobility between countries is high.
Tariffs and quotas have no effect on trade patterns.
#7
The Heckscher-Ohlin model predicts that countries will specialize in producing goods that:
Require abundant factors of production.
Require scarce factors of production.
Have low demand elasticity.
Have high production costs.
#8
Which trade theory emphasizes the role of economies of scale and imperfect competition in explaining international trade patterns?
Mercantilism
Heckscher-Ohlin model
New trade theory
Comparative advantage theory
#9
Dumping occurs when a country sells its exports in a foreign market at a price:
Above the domestic price.
Below the domestic price.
Equal to the domestic price.
That varies depending on tariffs imposed.
#10
The concept of 'tariff escalation' refers to:
A situation where tariffs remain constant across all stages of production.
An increase in tariffs as the product moves through successive stages of production.
A decrease in tariffs as the product moves through successive stages of production.
The elimination of tariffs on all imported goods.
#11
In the context of trade policy, what is the main purpose of a voluntary export restraint (VER)?
To encourage exports by providing subsidies.
To reduce imports by imposing tariffs.
To restrict exports voluntarily to avoid more severe trade barriers.
To promote fair trade practices through international agreements.
#12
Which of the following trade policies is most likely to result in a trade surplus for a country?
Implementing a quota on imports.
Imposing a tariff on exports.
Removing all trade barriers unilaterally.
Subsidizing domestic producers to increase output.
#13
The concept of 'trade creation' in international trade theory refers to:
The creation of new industries through trade.
The increase in consumption of imported goods due to lower prices.
The substitution of domestic goods for imports.
The shift from higher-cost domestic producers to lower-cost foreign producers after trade liberalization.
#14
The Smoot-Hawley Tariff Act of 1930 is known for:
Reducing tariffs to promote international trade during the Great Depression.
Imposing high tariffs, exacerbating the Great Depression, and triggering retaliatory measures.
Establishing the World Trade Organization.
Abolishing trade barriers among European nations.
#15
The 'most favored nation' principle in trade refers to:
Granting special trade privileges to specific nations.
Granting equal trade advantages to all nations within a trading bloc.
Granting trade advantages to a nation based on its economic power.
Granting trade advantages to a nation based on diplomatic relations.