Types of International Trade: A Comprehensive Guide for Students

Question 1

Which of the following is NOT an advantage of engaging in international trade?

Accepted Answer

Increased unemployment rate

Answer

Increased market size

Answer

Reduced production costs

Answer

Access to new technologies

Question 2

The process of re-exporting imported goods to another country is known as:

Accepted Answer

Entrepôt trade

Answer

Exporting

Answer

Importing

Answer

Transshipment

Question 3

The balance of trade refers to the:

Accepted Answer

Difference between a country's imports and exports

Answer

Total value of a country's imports

Answer

Total value of a country's exports

Answer

Ratio of a country's exports to imports

Question 4

A tariff is a:

Accepted Answer

Tax on imported goods

Answer

Tax on exported goods

Answer

Government subsidy for exports

Answer

Quota on imported goods

Question 5

World Trade Organization's Role

What's the main role of the World Trade Organization in boosting international trade?

Accepted Answer

Negotiating and agreeing on trade rules

Answer

Setting taxes and limits on imported goods

Answer

Giving money to countries that are developing

Question 6

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

Accepted Answer

Domestic trade

Answer

Importation

Answer

Exportation

Answer

Entrepot trade

Question 7

What is the term for commercial transactions solely between two countries?

Accepted Answer

Bilateral trade

Answer

Multilateral trade

Answer

Entrepot trade

Answer

Import trade

Question 8

What is the primary purpose of an entrepot?

Accepted Answer

To store and distribute goods for re-export

Answer

To manufacture goods for export

Answer

To import goods for domestic consumption

Answer

To facilitate trade between multiple countries

Question 9

Which of the following is a factor that can influence the volume of international trade?

Accepted Answer

All of the aforementioned factors

Answer

Tariffs

Answer

Exchange rates

Answer

Political stability

Question 10

Describe the key difference between a tariff and a quota.

Accepted Answer

A tariff imposes a tax on imported goods, while a quota restricts the quantity of imported goods.

Answer

A quota imposes a tax on imported goods, while a tariff restricts the quantity of imported goods.

Answer

A tariff is a government subsidy for exports, while a quota is a government subsidy for imports.

Answer

There is no substantial difference between a tariff and a quota.

Question 11

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

Accepted Answer

Promoting free trade and reducing trade barriers

Answer

Establishing groups of countries that agree to lower tariffs

Answer

Providing trade data and statistics

Answer

Regulating international trade on a global scale

Question 12

Which of the following is NOT a challenge faced in international trade?

Accepted Answer

Technological advancements

Answer

Cultural differences

Answer

Language barriers

Answer

Political instability

Question 13

Which of the following terms refers to the import of goods and services into a country?

Accepted Answer

Imports

Answer

Exports

Answer

Entrepôt trade

Question 14

Goods that are produced domestically and sold to other countries are known as:

Accepted Answer

Exports

Answer

Imports

Answer

Entrepôt goods

Question 15

Which type of international trade involves importing goods and re-exporting them without making any significant value addition?

Accepted Answer

Entrepôt trade

Answer

Exports

Answer

Imports

Question 16

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

Accepted Answer

That they have a comparative advantage in producing

Answer

That they can produce most efficiently

Answer

That they have an absolute advantage in producing

Question 17

Which international organization's primary objective is to promote free trade and reduce trade barriers?

Accepted Answer

World Trade Organization

Answer

World Bank

Answer

International Monetary Fund

Question 18

**Entrepôt Trade**
How does entrepôt trade make international trade easier?

Accepted Answer

It provides a convenient way to import and store goods for re-export.

Answer

It eliminates duties and taxes on imported goods.

Answer

It ensures that all imported goods are used within the country.

Answer

It helps countries avoid trade embargoes.

Question 19

Which of the following is not a form of international trade?

Accepted Answer

Domestic trade

Answer

Imports

Answer

Exports

Answer

Entrepot trade

Question 20

The act of purchasing goods and services from other countries is called:

Accepted Answer

Importing

Answer

Exporting

Answer

Entrepot trade

Answer

Foreign direct investment

Question 21

Which of the following are common types of trade barriers used by countries?

Accepted Answer

Tariffs, Quotas, and Subsidies

Answer

Tariffs, Quotas, and Currency Exchange Rates

Answer

Subsidies, Currency Exchange Rates, and Quotas

Answer

Tariffs, Subsidies, and Currency Exchange Rates

Question 22

Which of these is a type of trade that happens *within* a country, not between countries?

Accepted Answer

Retail trade

Answer

Imports

Answer

Exports

Answer

Entrepôt trade

Question 23

Examine the potential advantages and disadvantages of free trade agreements (FTAs) in international trade.

Accepted Answer

FTAs can have both positive and negative implications for international trade.

Answer

FTAs always lead to economic growth without any challenges.

Answer

FTAs only aim to reduce tariffs among participating countries.

Answer

FTAs primarily benefit developed countries, with little impact on developing economies.

Question 24

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

Accepted Answer

Domestic trade

Answer

Imports

Answer

Exports

Answer

Entrepôt trade

Question 25

What is the main reason for job losses in certain industries due to international trade?

Accepted Answer

Increased competition from foreign companies

Answer

Reduced demand for domestic products

Answer

Increased government regulations

Answer

Reduced consumer spending

Question 26

Which assumption of the theory of comparative advantage assumes that businesses within the same industry compete freely?

Accepted Answer

Perfect competition

Answer

Identical technology

Answer

Free trade

Answer

Constant costs

Question 27

How do non-tariff trade barriers, such as technical regulations and sanitary standards, primarily impact international trade?

Accepted Answer

Limit the movement of goods and services

Answer

Promote unrestricted trade

Answer

Reduce the price of imported goods

Answer

Increase demand for foreign products

Question 28

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

Accepted Answer

Domestic trade

Answer

Imports

Answer

Exports

Answer

Entrepot trade

Question 29

The process of purchasing goods and services from other countries is referred to as:

Accepted Answer

Importing

Answer

Exporting

Answer

Entrepot trading

Answer

Domestic trading

Question 30

Which term describes a country with a positive trade balance?

Accepted Answer

Trade surplus country

Answer

Exporter

Answer

Importer

Answer

Trade deficit country

Question 31

What is the purpose of creating an entrepot trade zone?

Accepted Answer

To facilitate the storage and distribution of goods

Answer

To promote tourism

Answer

To provide tax incentives for businesses

Answer

To create new jobs

Question 32

In what way can fluctuations in exchange rates influence a country's trade balance?

Accepted Answer

They can make imports more affordable and exports more costly.

Answer

They may not have an impact on trade volume.

Answer

They always lead to an improvement in a country's trade balance.

Question 33

What type of international trade involves purchasing products from other countries?

Accepted Answer

Importing

Answer

Exporting

Answer

Entrepot trade

Question 34

Which of the following describes selling goods to other countries?

Accepted Answer

Exporting

Answer

Importing

Answer

Entrepot trade

Question 35

What is the term for the storage and redistribution of goods in international trade?

Accepted Answer

Entrepot trade

Answer

Importing

Answer

Exporting

Question 36

What is the prime reason for nations to participate in international trade?

Accepted Answer

To gain access to resources and markets

Answer

To reduce production expenses

Answer

To boost employment opportunities

Question 37

Which theory proposes that countries should focus on producing and exporting goods where they have a comparative edge?

Accepted Answer

Comparative Advantage Theory

Answer

Absolute Advantage Theory

Answer

Mercantilism

Question 38

What is a tariff?

Accepted Answer

A tax levied on imported goods

Answer

A subsidy provided to exported goods

Answer

A restriction on the quantity of imported goods

Question 39

Which international organization is responsible for establishing international trade rules and regulations?

Accepted Answer

World Trade Organization (WTO)

Answer

United Nations (UN)

Answer

International Monetary Fund (IMF)

Question 40

How might international trade potentially affect domestic employment?

Accepted Answer

Both options a and b

Answer

It may create jobs in export-oriented industries.

Answer

It may reduce employment in industries competing with imports.

Question 41

Which of these is NOT an advantage of international trade?

Accepted Answer

Reduced income inequality

Answer

Increased consumer choice

Answer

Economic growth

Question 42

What is the main objective of trade agreements?

Accepted Answer

To lower trade obstacles

Answer

To raise trade obstacles

Answer

To regulate product manufacturing

Question 43

Which type of international trade involves the purchase of goods from another country for domestic use or manufacturing inputs?

Accepted Answer

Imports

Answer

Exports

Answer

Countertrade

Answer

Entrepôt trade

Question 44

Which type of international trade involves the storage and distribution of goods from one country to another for re-export?

Accepted Answer

Entrepôt trade

Answer

Exports

Answer

Imports

Question 45

Which theory of international trade emphasizes the benefits of countries specializing in the production and export of goods where they have the lowest opportunity cost?

Accepted Answer

Theory of comparative advantage

Answer

Absolute advantage theory

Answer

Ricardian theory

Answer

Mercantilist theory

Question 46

Which of the following is an advantage of international trade?

Accepted Answer

Increased economic growth

Answer

Reduced consumer choice

Answer

Increased environmental pollution

Question 47

Which of the following is a barrier to international trade?

Accepted Answer

Tariffs

Answer

Free trade agreements

Answer

Economic integration

Question 48

Which international organization plays a key role in establishing and enforcing international trade rules?

Accepted Answer

World Trade Organization

Answer

United Nations

Answer

International Monetary Fund

Answer

World Bank

Question 49

Which of the following trends has characterized international trade in recent decades?

Accepted Answer

Increased globalization

Answer

Decreased specialization

Answer

Reduced interdependence

Answer

Increased protectionism

Question 50

Which of the following is considered a contemporary challenge facing international trade?

Accepted Answer

Climate change

Answer

Increased economic growth

Answer

Technological advancements

Answer

Reduced global inequality