This quiz works best with JavaScript enabled. Home > Economics > International Economics > International Trade > International Trade – Quiz 61 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Trade Quiz 61 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Maxicopolis can produce 100 bushels of wheat or 100 yards of cloth. Minicopolis can produce 100 bushels of wheat or 300 yards of cloth. Which city has a comparative advantage in the production of cloth? A) Maxicopolis, because they can produce more wheat and more cloth. B) Minicopolis, because they can produce more wheat and more cloth. C) Minicopolis, they give up 1/3 bushel of wheat each time they make a yard of cloth. That means it's less expensive (in terms of wheat) for them to make cloth than it is for Maxicopolis. D) Maxicopolis, they give up 1 bushel of wheat each time they make a yard of cloth. That means its less expensive (in terms of wheat) for them to make cloth than it is for Minicopolis to make cloth. Show Answer Correct Answer: C) Minicopolis, they give up 1/3 bushel of wheat each time they make a yard of cloth. That means it's less expensive (in terms of wheat) for them to make cloth than it is for Maxicopolis. 2. This is an extremely useful tool for thinking about the reasons why trade may happen and about the effects of international trade on national welfare. A) Ricardian Model. B) International Trade Model. C) Comparative Advantage Model. D) Absolute Advantage Model. Show Answer Correct Answer: A) Ricardian Model. 3. In 2012 the UK held the Olympic Games which attracted a large number of visitors from foreign countries. Which item of the UK's current account balance will have benefitted directly from this event? A export trade in goods B export trade in services C import trade in goods D import trade in services A) A. B) B. C) C. D) D. Show Answer Correct Answer: B) B. 4. ..... keeps only samples in the shop A) Company. B) Retailer. C) Wholesaler. D) All of the above. Show Answer Correct Answer: C) Wholesaler. 5. The trade deficit with China has been decreasing in recent years as their economy grows, providing the citizens with more disposable income with which to purchase imported items coming from the U.S. A) True. B) False. Show Answer Correct Answer: A) True. 6. The opportunity for Indonesian products to penetrate the international market is very large because it is supported by..... A) Wealth of natural resources, human resources, and abundant culture. B) The region's strategic location as the main route for international trade. C) There is progress in the fields of science and technology. D) The ability to carry out production efficiency so that it has high competitiveness. Show Answer Correct Answer: A) Wealth of natural resources, human resources, and abundant culture. 7. Why were tariffs created? A) To convince Great Britian to stop impressing U.S. sailors. B) To improve trade between the United States and Great Britian. C) To encourage people in the United States to purchase American made goods. D) To help the cotton trade in the southern states. Show Answer Correct Answer: C) To encourage people in the United States to purchase American made goods. 8. Why might businesses be cautious about giving Credit terms in international trade? A) It is the most expensive option. B) It requires no financial commitment from the buyer. C) It can lead to non-payment risk for the seller. D) It is the most common method in international trade. Show Answer Correct Answer: C) It can lead to non-payment risk for the seller. 9. Give one example of a business that will find it more difficult to prepare budgets when the exchange rate goes up and down a lot A) A business that operates completely inside one country. B) A business that buys components from other countries and sells products in other countries. Show Answer Correct Answer: B) A business that buys components from other countries and sells products in other countries. 10. The currency in which payment for import is made depends upon ..... A) The country from which the goods are shipped. B) The country of origin of goods. C) The arrangement between the buyer and seller. D) The bank which the importer's bank has correspondent relationship. Show Answer Correct Answer: A) The country from which the goods are shipped. 11. If the US had free trade with all countries, A) There would be fewer jobs in exporting industries. B) The US government would go bankrupts because of revenue loss. C) Some workers in formerly protected industries would lose their jobs. D) None of above. Show Answer Correct Answer: C) Some workers in formerly protected industries would lose their jobs. 12. The followings are true about Mercantilism EXCEPT: A) It believes that national prosperity is the result of a positive balance of trade. B) The mercantilist government see import as good and export as bad. C) It lead to a situation of zero sum game for some nations. D) Mercantilist countries colonized other countries to gain resources and market finished goods. Show Answer Correct Answer: B) The mercantilist government see import as good and export as bad. 13. Explain the concept of the foreign exchange market. A) The foreign exchange market is a market where only stocks and bonds are traded. B) The foreign exchange market is a physical location where currencies are exchanged. C) The foreign exchange market is a government-regulated market where currencies are traded. D) The foreign exchange market is a decentralized global market where currencies are traded. Show Answer Correct Answer: D) The foreign exchange market is a decentralized global market where currencies are traded. 14. "carrier" is the same as "shipper" A) True. B) False. Show Answer Correct Answer: B) False. 15. Setting a limit on the quantity of a product that may be imported or exported within a given period to regulate international trade is called? A) Tariff. B) Embargo. C) Quota. D) Deal. Show Answer Correct Answer: C) Quota. 16. International trade offers the following benefits to the nation: A) Earnings of foreign exchange. B) More efficient use of resources. C) Improving growth prospects and employment potentials. D) All of the Above. Show Answer Correct Answer: D) All of the Above. 17. The Balance of Trade is the difference between ..... A) Visible exports and invisible imports. B) Invisible exports and visible imports. C) Visible exports and visible imports. D) None of above. Show Answer Correct Answer: C) Visible exports and visible imports. 18. What is dumping? A) Selling goods in a foreign market below their cost of production. B) Selling goods in a foreign market at a higher price than in the domestic market. C) Selling goods in a foreign market at their fair market value. D) Selling goods in a foreign market with the goal of driving indigenous competitors out. Show Answer Correct Answer: A) Selling goods in a foreign market below their cost of production. 19. What is the balance of trade in the United States? A) A surplus in both goods and services and foreign investments. B) A deficit in both goods and services and foreign investments. C) A surplus in foreign investments but a deficit in goods and services. D) A surplus in goods and services but a deficit in foreign investments. Show Answer Correct Answer: B) A deficit in both goods and services and foreign investments. 20. Which of the following accurately defines a tariff? A) A special tax placed on foreign goods sold in the U.S. B) A method used to stop the shipment of certain products to or from particular countries. C) A packing and shipping regulation for hazardous products. D) A fixed limit on the amount of import or export of a product. Show Answer Correct Answer: A) A special tax placed on foreign goods sold in the U.S. ← PreviousNext →Related QuizzesInternational Economics QuizzesEconomics QuizzesInternational Trade Quiz 1International Trade Quiz 2International Trade Quiz 3International Trade Quiz 4International Trade Quiz 5International Trade Quiz 6International Trade Quiz 7International Trade Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books