Master International Trade: Enhance Your Business and Economics Knowledge

Question 1

According to the theory of comparative advantage, countries should specialize in producing and exporting goods where they have a(n):

Accepted Answer

Comparative advantage

Answer

Absolute advantage

Answer

Equal advantage

Answer

No advantage

Question 2

Which of the following is a non-tariff trade barrier?

Accepted Answer

Health and safety regulations

Answer

Import quotas

Answer

Export tariffs

Answer

Subsidies

Question 3

The process of a country becoming more interconnected in the global economy is known as:

Accepted Answer

Globalization

Answer

Internationalization

Answer

Trade liberalization

Answer

Economic development

Question 4

Which of the following organizations is responsible for promoting free trade and economic cooperation among nations?

Accepted Answer

World Trade Organization (WTO)

Answer

International Monetary Fund (IMF)

Answer

World Bank

Answer

United Nations

Question 5

The balance of trade refers to the:

Accepted Answer

Difference between exports and imports

Answer

Total value of exports

Answer

Total value of imports

Answer

Net inflow of foreign investment

Question 6

Which of the following are the primary types of trade barriers that affect international trade?

Accepted Answer

Tariffs, subsidies, quotas, and embargoes

Answer

Subsidies, tariffs, exchange rates, and technical standards

Answer

Import quotas, environmental regulations, and currency controls

Answer

Trade agreements, sanctions, and currency devaluation

Question 7

What is the primary purpose of a government tariff?

Accepted Answer

To protect domestic industries from foreign competition

Answer

To generate revenue for the government

Answer

To reduce the volume of imports

Answer

To stabilize the national economy

Question 8

According to which economic theory should countries specialize in producing and exporting goods where they have a comparative advantage?

Accepted Answer

Classical Theory

Answer

Mercantilism

Answer

Keynesian Theory

Answer

Monetarism

Question 9

What is the main purpose of an export subsidy provided by a government?

Accepted Answer

To make domestically produced goods more competitive in foreign markets

Answer

To protect domestic industries from foreign competition

Answer

To increase the volume of imports

Answer

To stabilize the national economy

Question 10

According to the theory of comparative advantage, countries should:

Accepted Answer

Specialize in producing and exporting goods and services where they have a lower opportunity cost

Answer

Produce all goods and services domestically to become self-sufficient

Answer

Import all goods and services from other countries to avoid competition

Answer

Focus on producing goods and services where they have an absolute advantage

Question 11

Which of the following is an example of a multinational corporation?

Accepted Answer

A company that operates in multiple countries

Answer

A company that is owned by several governments

Answer

A company that is headquartered in a single country

Answer

A company that only exports goods and services

Question 12

How effective are international trade organizations, like the World Trade Organization (WTO), in resolving trade disputes?

Accepted Answer

Effective, as they offer clear rules and processes for resolving disputes.

Answer

Ineffective, as they often take too long to resolve disputes.

Answer

Irrelevant, as most trade disputes can be resolved between the countries involved.

Answer

Unfair, as they tend to favor developed countries over developing countries.

Question 13

Which of the following theories proposes that countries should specialize in producing and exporting goods in which they have a relative cost advantage?

Accepted Answer

Comparative advantage theory

Answer

Absolute advantage theory

Answer

Factor endowment theory

Answer

Porter's Five Forces theory

Question 14

What is the term for a government policy that imposes a tax on imported goods?

Accepted Answer

Tariff

Answer

Quota

Answer

Embargo

Answer

Subsidy

Question 15

What is the term for the statistical measure that represents the net difference between a country's exports and imports?

Accepted Answer

Trade balance

Answer

Balance of payments

Answer

Current account

Answer

Capital account

Question 16

According to the theory of comparative advantage, countries should:

Accepted Answer

Produce and export goods where they have a **relative** advantage.

Answer

Produce and export goods where they have an **absolute** advantage.

Answer

Produce all goods domestically, regardless of cost.

Answer

Import all goods, as it is always cheaper.

Question 17

The North American Free Trade Agreement (NAFTA) is an example of a:

Accepted Answer

Free trade area

Answer

Customs union

Answer

Common market

Answer

Monetary union

Question 18

What is a potential advantage of international trade agreements?

Accepted Answer

Increased economic growth and job creation

Answer

Higher prices for consumers

Question 19

According to the theory of comparative advantage, countries should focus on producing and exporting goods where they have a:

Accepted Answer

Lower opportunity cost

Answer

Higher absolute advantage

Answer

Equal opportunity cost

Question 20

Which of the following is NOT a benefit of international trade?

Accepted Answer

Boosted national security

Answer

Enhanced economic growth

Answer

Lowered prices for consumers

Answer

Greater product and service availability

Question 21

Which international trade theory suggests nations should focus on producing and exporting goods where they have a relative advantage?

Accepted Answer

Comparative advantage theory

Answer

Absolute advantage theory

Answer

Mercantilism

Answer

Monetarism

Question 22

What is the primary purpose of a free trade agreement?

Accepted Answer

Reducing trade barriers among participating nations

Answer

Raising trade barriers among participating nations

Answer

Regulating the exchange of goods and services internationally

Answer

Promoting economic growth in developing nations

Question 23

What term refers to the total value of all goods and services produced within a country's borders in a given year?

Accepted Answer

Gross domestic product (GDP)

Answer

Gross national product (GNP)

Answer

Net domestic product (NDP)

Answer

National income

Question 24

What term describes a trade deficit?

Accepted Answer

When a country imports more than it exports

Answer

When a country exports more than it imports

Answer

When a country has a balanced trade account

Answer

When a country's currency is overvalued

Question 25

According to the theory of comparative advantage, countries should specialize in producing and exporting goods where they:

Accepted Answer

Have a comparative advantage in production efficiency

Answer

Have an absolute advantage in production costs

Answer

Have the highest demand for the goods

Answer

Can produce the goods at the lowest absolute cost

Question 26

What is the primary purpose of a tariff?

Accepted Answer

To protect domestic industries from foreign competition

Answer

To raise government revenue

Answer

To promote free trade between countries

Answer

To stabilize the exchange rate

Question 27

What is the term used to describe the total value of all goods and services produced in a country within a specific time period?

Accepted Answer

Gross domestic product (GDP)

Answer

Gross national income (GNI)

Answer

Balance of trade

Answer

Current account balance

Question 28

What is the term used to describe the relative value of one currency in terms of another?

Accepted Answer

Exchange rate

Answer

Inflation rate

Answer

Interest rate

Answer

Balance of payments

Question 29

How has technology made it easier for countries to trade with each other?

Accepted Answer

Lowered transportation costs

Accepted Answer

Reduced the need for middlemen

Answer

Made it harder to track goods

Answer

Increased language barriers

Question 30

Which of the following is a potential benefit of free trade for consumers?

Accepted Answer

Lower prices due to increased competition

Answer

Protection of domestic industries

Answer

Higher import tariffs

Answer

Reduced variety of goods available

Question 31

Which of the following is a potential concern associated with free trade?

Accepted Answer

Job displacement in specific industries facing foreign competition

Answer

Increased economic growth

Answer

Enhanced income equality

Answer

Improved environmental sustainability

Question 32

Which of the following measures the total value of goods and services a country exports to other countries?

Accepted Answer

Exports

Answer

Trade surplus

Answer

Trade deficit

Answer

Imports

Question 33

Which of the following economic policies involves government measures to restrict or control international trade?

Accepted Answer

Protectionism

Answer

Globalization

Answer

Mercantilism

Answer

Free trade

Question 34

What is the main purpose of the World Trade Organization (WTO)?

Accepted Answer

To promote free trade, lower trade barriers, and resolve trade disputes.

Answer

To set tariffs and quotas on imported goods.

Answer

To provide financial assistance to developing countries.

Answer

To enforce intellectual property laws.

Question 35

Which of the following is a fundamental tenet of classical international trade theory?

Accepted Answer

Comparative Advantage

Answer

Protectionism

Answer

Mercantilism

Answer

Autarky

Question 36

What is the primary objective of imposing a tariff?

Accepted Answer

To shield domestic industries from foreign competition

Answer

To generate revenue for the government

Answer

To mitigate inflation

Question 37

Which international organization is dedicated to promoting free and fair trade among member nations?

Accepted Answer

World Trade Organization (WTO)

Answer

International Monetary Fund (IMF)

Answer

World Bank

Answer

United Nations

Question 38

What is the primary purpose of a trade bloc?

Accepted Answer

To foster economic integration among member countries

Answer

To provide financial assistance to developing nations

Answer

To limit trade with non-member countries

Question 39

How do exchange rates impact international trade?

Accepted Answer

Fluctuations in exchange rates can affect the competitiveness of exports and imports

Answer

Exchange rates have no significant impact on trade

Answer

Exchange rates only affect imports

Question 40

The mercantilist theory posits that:

Accepted Answer

A nation's economic well-being is directly tied to its accumulation of gold and silver

Answer

Free trade is universally beneficial

Answer

Government intervention in international trade should be minimized

Question 41

Which of the following is a potential advantage of specialization in international trade?

Accepted Answer

Increased efficiency and productivity

Answer

Widening trade deficits

Answer

Job losses in industries that face import competition

Answer

Limited consumer options

Question 42

The concept of comparative advantage is rooted in the analysis of:

Accepted Answer

The relative opportunity costs of producing different goods between countries

Answer

The size of each country's labor force

Answer

The level of technological advancement in each country

Answer

The exchange rates between different currencies

Question 43

Tariffs are a form of trade protection that primarily:

Accepted Answer

Increase the cost of imported goods for domestic consumers

Answer

Apply exclusively to imports from specific countries

Answer

Have no impact on the cost of imported goods for domestic consumers

Answer

Decrease the cost of imported goods for domestic consumers

Question 44

What is the primary mission of the World Trade Organization (WTO)?

Accepted Answer

To encourage the free flow of goods and services across borders

Answer

To restrict international trade through tariffs and quotas

Answer

To create a single currency for use in international transactions

Answer

To oversee and regulate the global financial system

Question 45

What economic term describes a country producing more of a good than it consumes domestically?

Accepted Answer

Export surplus

Answer

Import surplus

Answer

Comparative advantage

Answer

Trade deficit

Question 46

Economic globalization is best characterized by:

Accepted Answer

The growing interconnectedness and interdependence of global economies

Answer

The rise of protectionist policies like tariffs and quotas

Answer

A decrease in the movement of people and ideas across borders

Answer

A decline in international trade and investment

Question 47

Which of the following is NOT typically considered a potential benefit of international trade?

Accepted Answer

Increased income inequality within countries

Answer

Access to a wider variety of goods and services

Answer

Overall economic growth and development

Answer

Lower prices for goods and services for consumers

Question 48

Which of the following is LEAST likely to be a benefit of increased international trade?

Accepted Answer

Reduced competition for domestic businesses

Answer

Increased economic growth

Answer

Job creation in certain industries

Answer

Lower prices for consumers

Question 49

The theory of comparative advantage suggests that countries should prioritize producing and exporting goods and services:

Accepted Answer

Where they have a lower opportunity cost compared to other countries

Answer

That are the most technologically advanced

Answer

That are considered essential goods

Answer

For which they have the highest domestic demand

Question 50

What does the balance of trade measure for a country?

Accepted Answer

The difference between the value of its exports and imports

Answer

The difference between government revenue and government spending

Answer

The difference between domestic consumption and foreign investment

Answer

The difference between a country's total output and its total expenditure

Question 51

What is a likely consequence of a country's currency experiencing devaluation?

Accepted Answer

Its exports become more competitive in price on the global market

Answer

The country experiences a decrease in inflation

Answer

The country's imports become cheaper

Answer

The country experiences slower economic growth

Question 52

Which policy is most likely to promote international trade?

Accepted Answer

Reducing tariffs and easing import restrictions

Answer

Setting strict quotas on the quantity of goods that can be imported

Answer

Raising tariffs on goods imported from other countries

Answer

Increasing government subsidies specifically for exporters