This quiz works best with JavaScript enabled. Home > Finance > Economics > International Economics > International Economics – Quiz 31 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Economics Quiz 31 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. ..... occurs, according to the U.S. Department of Commerce, whenever a U.S. citizen, organization, or affiliated group takes an interest of 10% or more in a foreign business entity. A) Official development assistance. B) Oversea remittance. C) Foreign portfolio investment. D) Foreign direct investment. Show Answer Correct Answer: D) Foreign direct investment. 2. Consider the following two cases. In the first, a U.S. firm purchases 18% of a foreign firm. In the second, a U.S. firm builds a new production facility in a foreign country. Both are ....., with the first referred to as ..... and the second as ..... A) Foreign direct investment (FDI) outflows; greenfield; brownfield. B) Foreign direct investment (FDI) inflows; greenfield; brownfield. C) Foreign direct investment (FDI) outflows; brownfield; greenfield. D) Foreign direct investment (FDI) inflows; brownfield; greenfield. E) Foreign direct investment (FDI); inflows; outflows. Show Answer Correct Answer: A) Foreign direct investment (FDI) outflows; greenfield; brownfield. 3. This is what you miss when you choose one choice over another. A) Opportunity costs. B) Income. C) Sunk costs. D) Future costs. Show Answer Correct Answer: A) Opportunity costs. 4. The difference between import tariffs and quotas is: A) Tariffs are a tax on locally produced goods but quotas limit the quantity of imports. B) Tariffs are a tax on imports and quotas are a tax on exports. C) Tariffs are a tax on imports and quotas limit the quantity of imports. D) Tariffs are a tax on all products but quotas just limit the quantity of imports. Show Answer Correct Answer: C) Tariffs are a tax on imports and quotas limit the quantity of imports. 5. A type of trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time. A) Embargo. B) Tariff. C) Subsidy. D) Quota. Show Answer Correct Answer: D) Quota. 6. A tariff is a form of taxation on foreign products while a quota is a ..... on imports from foreign countries. A) Boost. B) Rise. C) Increase. D) Limit. Show Answer Correct Answer: D) Limit. 7. Country A exports 10% more goods than it imports. By contrast, country B imports 15% more than it exports. Which statement is TRUE? A) Country B must rely on foreign aid from country A. B) Country A has a comparative advantage over country B. C) Country A has a favorable balance of trade, but country B has an unfavorable balance of trade. D) Country B has a favorable balance of trade, but country A has an unfavorable balance of trade. Show Answer Correct Answer: C) Country A has a favorable balance of trade, but country B has an unfavorable balance of trade. 8. Tariffs, quotas, embargoes, and any other regulation or policy that restricts international trade A) Closed trade policies. B) Trade barriers. C) Open trade policies. D) Free trade enablers. Show Answer Correct Answer: B) Trade barriers. 9. Improvements in technology for producing all goods must result in: A) An inward shift in the production possibilities curve. B) A flatter production possibilities curve. C) A steeper production possibilities curve. D) An outward shift in the production possibilities curve. Show Answer Correct Answer: D) An outward shift in the production possibilities curve. 10. The price of one currency in terms of other currency is called ..... A) Foreign exchange rate. B) Flexible rate of exchange. C) Current rate of exchange. D) None of the above. Show Answer Correct Answer: A) Foreign exchange rate. 11. Comparative advantage is an economy's ability to produce a particular good or service at a ..... opportunity cost than its trading partners. A) Different. B) Higher. C) Lower. D) Similar. Show Answer Correct Answer: C) Lower. 12. If there is a fixed rate tax taken, such as social security, from everyone's pay check. What type of tax would this be? A) Regressive. B) Progressive. C) Proportional. D) Property. Show Answer Correct Answer: C) Proportional. 13. Which of the following is not an argument for free trade, but against? A) Protecting national security. B) Facilitate trade among members. C) Common currency. D) Reducing trade barriers. Show Answer Correct Answer: C) Common currency. 14. The ability to produce something using fewer resources than other producers is called having the ..... A) Comparative Advantage. B) Absolute Advantage. C) Better Advantage. D) Competitive Advantage. Show Answer Correct Answer: B) Absolute Advantage. 15. A situation in which a nation exports more goods and services than it imports. A) Balance of Trade. B) Trade Surplus. C) Balance of Payments. D) Trade Deficit. Show Answer Correct Answer: B) Trade Surplus. 16. What is the theme song for international trade? A) Randy Newman, "You Got a Friend In Me". B) The Rembrandts, "I'll Be There For You". C) Biz Markie, "Just a Friend". D) Dionne Warwick, Elton John, Gladys Knight & Stevie Wonder, "That's What Friends Are For". Show Answer Correct Answer: D) Dionne Warwick, Elton John, Gladys Knight & Stevie Wonder, "That's What Friends Are For". 17. NOT argument for free trade A) National economic security. B) Domestic job security. C) Open competition. D) Infant industries. Show Answer Correct Answer: C) Open competition. 18. Trade bloc:United States, Canada, and Mexico A) European Union. B) ASEAN. C) NAFTA. D) None of above. Show Answer Correct Answer: C) NAFTA. 19. The first SAARC summit was held in 1985 in ..... A) Dhaka. B) Bangalore. C) Kathmandu. D) Male. Show Answer Correct Answer: A) Dhaka. 20. When an exchange rate of a currency depreciates, the following will be likely to happen: A) Import prices will fall and export prices will rise. B) Export sales will fall and import purchases will increase. C) Export prices will fall and import prices will rise. D) Prices of all products will not change. Show Answer Correct Answer: C) Export prices will fall and import prices will rise. 21. Trade between two countries can be useful if cost ratios of goods are: A) Different. B) Decreasing. C) Undetermined. D) Equal. Show Answer Correct Answer: A) Different. 22. The figure illustrates the international movement of capital. When there is international movement of capital in both Nations, how does the yield for Nation 1's owners of noncapital factors change? A) Gain CNEG. B) Gain CNRG. C) Lose CNEG. D) Lose CNRG. Show Answer Correct Answer: C) Lose CNEG. 23. Which of the following does NOT play a role in Georgia's economy? A) Northeast Inland Port. B) Northwest Outland Port. C) Port of Savannah. D) Port of Brunswick. Show Answer Correct Answer: B) Northwest Outland Port. 24. An argument that cites the importance of maintaining industries critical to the country even when the industry cannot efficiently compete at the international level. A) National Security. B) Infant Industries. C) Domestic Employment. D) Free Trade. Show Answer Correct Answer: A) National Security. 25. If the US $ were to appreciate in relation to the Euro, what effect would this have? A) European consumers would have more purchasing power in US. B) US consumers can buy more European goods and services for fewer $ $. C) US consumers can buy more English goods and services for fewer $ $. D) European tourists to the US will spend more $ $. Show Answer Correct Answer: B) US consumers can buy more European goods and services for fewer $ $. 26. Foreign investors prefer direct investments to portfolio investments because they want to ..... A) Diversify risk and gain higher rate of return on capital. B) Export product to the host market. C) Retain direct control over their unique production knowledge or managerial skills. D) Transfer knowledge and technology to local investors. Show Answer Correct Answer: C) Retain direct control over their unique production knowledge or managerial skills. 27. What a company gives up in order to make another product is known as ..... A) Opportunity Cost. B) Comparative Advantage. C) Absolute Advantage. D) Balance of Trade. Show Answer Correct Answer: A) Opportunity Cost. 28. Tariffs are NOT defended on the grounds that they A) Improve the terms of trade of foreign nations. B) Protect jobs and reduce unemployment. C) Promote growth and development of young industries. D) Protect domestic producers from foreign low prices. Show Answer Correct Answer: A) Improve the terms of trade of foreign nations. 29. Why does the United States need to import products? A) The US does not import products. B) Some are easier and cheaper to make in other countries. C) The US makes all of its own products. D) None of above. Show Answer Correct Answer: B) Some are easier and cheaper to make in other countries. 30. NAFTA, the EU, and ASEAN all benefit its members by ..... A) Raising trade barriers with all nations. B) Promoting trade with all nations. C) Raising trade barriers with just their members. D) Lowering trade barriers with their member nations. Show Answer Correct Answer: D) Lowering trade barriers with their member nations. ← PreviousNext →Related QuizzesEconomics QuizzesFinance QuizzesInternational Economics Quiz 1International Economics Quiz 2International Economics Quiz 3International Economics Quiz 4International Economics Quiz 5International Economics Quiz 6International Economics Quiz 7International Economics Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books