This quiz works best with JavaScript enabled. Home > Finance > Economics > International Economics > International Economics – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Economics Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. An international organization of European countries formed to reduce trade barriers and increase cooperation among its members A) European Confederation. B) European Union. C) Association of European Countries. D) European Cooperation. Show Answer Correct Answer: B) European Union. 2. International trade without government restrictions. A) Embargo. B) Trade barriers. C) Free trade. D) Imports. Show Answer Correct Answer: C) Free trade. 3. The difference in value between a country's imports and exports is its ..... A) Balance of trade. B) Trading block. C) Appreciation. D) Quota. Show Answer Correct Answer: A) Balance of trade. 4. A main advantage of specialization results from A) Economics of large scale production. B) The specializing country behaving as a monopoly. C) Smaller production runs resulting in lower unit costs. D) High wages paid to foreign workers. Show Answer Correct Answer: A) Economics of large scale production. 5. The principal objective of WTO is to: A) Reduce the level of all tariffs and encourage trade. B) To increase tariffs on all imported goods. C) Prevent the trading of services across nations' borders. D) Encourage countries to establish quotas. Show Answer Correct Answer: A) Reduce the level of all tariffs and encourage trade. 6. Who gave the income trade terms? A) Robertson (Robertson). B) Jacob Weiner (Jacob Weiner). C) Tossing. D) Dorrance (Dorrance). Show Answer Correct Answer: D) Dorrance (Dorrance). 7. The payments that the government gives to certain industries to provide financial help are known as a(n) A) Embargo. B) Quota. C) Subsidy. D) Tariff. Show Answer Correct Answer: C) Subsidy. 8. What are reasons for trade imbalances between countries? (I)(Several answers may be correct.) A) Overvaluation of a country's currency. B) Different prices of single goods. C) Different population size. D) Different climate conditions. Show Answer Correct Answer: A) Overvaluation of a country's currency. 9. Globalization is the economic integration of the world through increased trade, investment, and monetary transactions across international borders. A) False. B) True. Show Answer Correct Answer: B) True. 10. What is the ability to produce a product most efficiently known as? A) Absolute advantage. B) Division of labor. C) Opportunity cost. D) Comparative advantage. Show Answer Correct Answer: D) Comparative advantage. 11. An example of a Free trade area A) NAFTA. B) EU. C) CARICOM. D) ASEAN. Show Answer Correct Answer: A) NAFTA. 12. An individual, firm, or country using the fewest inputs to produce the same amount of output or the individual, firm, or country producing the largest number of units of output given the same productive resources. A) Infant industries. B) Balance of trade. C) Absolute advantage. D) Comparative advantage. Show Answer Correct Answer: C) Absolute advantage. 13. Suppose the exchange rate between the United States and Japan changes from $ 1 = 100 yen to $ 1 = 110 yen. What would happen to the prices of American goods in Japan? A) Increase or decrease. B) Remain the same. C) Decrease. D) Increase. Show Answer Correct Answer: D) Increase. 14. How many main Impacts are there that shape international trade for every nation A) 4. B) 1. C) 3. D) 2. Show Answer Correct Answer: C) 3. 15. What do NAFTA, EU, and ASEAN have in common? A) The United States is a member of all three. B) Each group attempts to enforce trade barriers rigidly. C) All three groups use the same currency. D) They are all interested in promoting free trade. Show Answer Correct Answer: D) They are all interested in promoting free trade. 16. Which of the following is not a type of exchange rate? A) Fixed Exchange Rates. B) Floating Exchange Rates. C) Managed Exchange Rates. D) Secure Exchange Rates. Show Answer Correct Answer: D) Secure Exchange Rates. 17. Which of the following is NOT an obstacle to economic development? A) Population Growth. B) Tariffs / Quotas. C) Corruption / War. D) Natural Resources / Geography. Show Answer Correct Answer: D) Natural Resources / Geography. 18. An increase in exports leads to which of the following: A) An increase in demand for the domestic currency. B) A decrease in demand for the domestic currency. C) An increase in the supply of the domestic currency. D) A decrease in the supply of the domestic currency. Show Answer Correct Answer: A) An increase in demand for the domestic currency. 19. A tariff imposed to protect domestic firms from import competition A) Protective tariff. B) Competitive tariff. C) Defensive tariff. D) Barrier tariff. Show Answer Correct Answer: A) Protective tariff. 20. International Economics is a ..... economics A) Positive. B) Public. C) Normative. D) Traditional. Show Answer Correct Answer: C) Normative. 21. A country is said to have a comparative advantage in the production of a good when it ..... A) Requires fewer labour hours to produce the goods. B) Has no opportunity cost of producing goods. C) Has lower opportunity cost of producing of the goods. D) Requires more labour hours to produce the goods. Show Answer Correct Answer: C) Has lower opportunity cost of producing of the goods. 22. Safety, environmental, health, or other technical requirements set by a government. Imports must meet these requirements before they are allowed to come into the country. A) Standards. B) Subsidy. C) Quota. D) Tariffs. Show Answer Correct Answer: A) Standards. 23. External trade is also called A) Foreign trade. B) International trade. C) Both. D) None of above. Show Answer Correct Answer: C) Both. 24. Dynamic comparative advantage theory A) Helps explain why some nations use industrial policy to support potentially competitive new firms. B) Cannot explain strategic competition between firms such as Boeing and Airbus. C) Is another name for Ricardo's comparative advantage theory. D) None of the above. Show Answer Correct Answer: A) Helps explain why some nations use industrial policy to support potentially competitive new firms. 25. An excess demand for a particular currency in the floating exchange rate system will lead to ..... A) An appreciation of that currency. B) A long-term shortage of that currency. C) A long-term surplus of that currency. D) A depreciation of that currency. Show Answer Correct Answer: A) An appreciation of that currency. 26. NOT an argument for free trade A) Reduced competition. B) Improved products. C) Specialization & comparative advantage. D) Export industries. Show Answer Correct Answer: A) Reduced competition. 27. A government procurement regulation or practice constitutes a nontariff barrier when A) Government agencies are required to purchase from the lowest bidder. B) Government shows a preference for domestic sellers over foreign sellers. C) Government requires that goods that it purchases meet a uniform safety standard. D) Government purchases are financed by tax receipts. Show Answer Correct Answer: B) Government shows a preference for domestic sellers over foreign sellers. 28. Which of the following would decrease the demand for A$ by the Japanese A) A fall in their unemployment. B) Increased Japanese exports of steel and cars. C) Decreased Japanese imports of iron ore. D) A free trade agreement between Japan and Australia. Show Answer Correct Answer: C) Decreased Japanese imports of iron ore. 29. If Malaysia increases the tariff on imported cars, this will ..... A) Decrease the amount of cars imported. B) Increase the amount of cars imported. C) Decrease the amount of cars imported and increase the production of cars in Malaysia. D) Increase the amount of cars imported and increase the production of cars on Malaysia. Show Answer Correct Answer: C) Decrease the amount of cars imported and increase the production of cars in Malaysia. 30. Which of the following will cause the tariff equivalent of a quota to increase in a small country? A) A decrease in domestic demand (the demand curving shifting left). B) A decrease in domestic supply (the supply curving shifting left). C) A rise in the world price. D) A rise in the quantity of imports permitted by the quota. Show Answer Correct Answer: B) A decrease in domestic supply (the supply curving shifting left). ← PreviousNext →Related QuizzesEconomics QuizzesFinance QuizzesInternational Economics Quiz 1International Economics Quiz 3International Economics Quiz 4International Economics Quiz 5International Economics Quiz 6International Economics Quiz 7International Economics Quiz 8International Economics Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books