This quiz works best with JavaScript enabled. Home > Finance > Economics > International Economics > International Economics – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Economics Quiz 6 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. If the value of a country's exports exceeds the value of its imports A) Trade deficit. B) Trade surplus. C) Balance of trade. D) None of above. Show Answer Correct Answer: B) Trade surplus. 2. Intraindustry trade can be explained by all of the following except A) Product differentiation for goods such as automobiles. B) Different growing seasons of the year for agricultural products. C) High transportation costs as a proportion of product value. D) High per capita incomes in exporting countries. Show Answer Correct Answer: D) High per capita incomes in exporting countries. 3. A tax on imports set by the importing country on the exporting country is known as ..... A) Tariff. B) Quota. C) Standard. D) Embargo. Show Answer Correct Answer: A) Tariff. 4. Exchange rates suddenly change and now fewer U.S. dollars are required to buy a British Pound. What happened to our money? A) The US Dollar Appreciated. B) The US Dollar Depreciated. Show Answer Correct Answer: A) The US Dollar Appreciated. 5. Which of the following will cause the exchange rate of a currency to go up? A) An increase in the demand for import. B) A balance of payment deficit. C) Speculation that the exchange rate will fall. D) An increase in investment flow into the country. Show Answer Correct Answer: D) An increase in investment flow into the country. 6. Floating exchange rates are determined by A) Supply and demand. B) The President of the United States. C) The central bank. D) The stock of gold reserves. Show Answer Correct Answer: A) Supply and demand. 7. The introduction of a tariff by Brazil on Australian Beef would likely impact on the Australian Economy by A) Increase in imports. B) Decrease export volumes. C) Force consumers to switch from Beef to Chicken. D) Increase the value of the Australian dollar. Show Answer Correct Answer: B) Decrease export volumes. 8. A situation in which producers in one nation depend on others to provide goods and services they do not produce. A) Exports. B) Imports. C) Economic Interdependence. D) Specialization. Show Answer Correct Answer: C) Economic Interdependence. 9. In the foreign exchange rate system, the value of the currency of a country is determined by ..... A) Demand and supply of export and import. B) Total central bank reserves. C) International Monetary Fund. D) Demand and supply of currency. Show Answer Correct Answer: D) Demand and supply of currency. 10. What is the advantage of free capital flow among countries? A) More efficient use of capital. B) Benefits both lenders and borrowers. C) Huge investments of all kinds all over the world. D) Financial crisis. Show Answer Correct Answer: D) Financial crisis. 11. Suppose the US decreases the tariff on imported beef which makes foreign beef cheaper than US beef. What would the consequences be? A) There would be an increase in the number of imported beef and the number of beef produced in the US. B) There would be a decrease in the number of imported beef and the number of beef produced in the US. C) There would be an increase in the number of imported beef and a decrease in the number of beef produced in the US. D) There would be a decrease in the number of imported beef and an increase in the number of beef produced in the US. Show Answer Correct Answer: C) There would be an increase in the number of imported beef and a decrease in the number of beef produced in the US. 12. When a country, or several countries, impose economic sanctions against a nation by refusing to trade with it. A) Standards. B) Tariffs. C) Purchasing power. D) Embargo. Show Answer Correct Answer: D) Embargo. 13. Measurements that restrict or prevent trade with other countries A) Free trade. B) Imports. C) Embargo. D) Trade barriers. Show Answer Correct Answer: D) Trade barriers. 14. The exchange rate is determined by ..... A) Stock Market. B) Supply and Demand. C) Foreign investment in a country. D) Income distribution. Show Answer Correct Answer: B) Supply and Demand. 15. Leontief paradox is connected with which of the following theories A) Relative cost advantage theory. B) Heckscher Ohlin theory. C) Absolute cost advantage theory. D) Factor price equalisation theory. Show Answer Correct Answer: B) Heckscher Ohlin theory. 16. To plan for his business trip to Denmark, Tony needs to know how many Danish krones his US dollars are worth. Tony needs to be aware of A) Whether or not the US dollar currently enjoys a comparative advantage in trade. B) International tariffs. C) Any currency embargoes. D) The exchange rate. Show Answer Correct Answer: D) The exchange rate. 17. Andy can produce a pillow in 15 minutes or a blanket in 20 minutes, and Barbara can produce a pillow in 20 minutes or a blanket in 30 minutes. Who has the absolute advantage in making blankets? A) Andy. B) Barbara. C) Neither. D) Both. Show Answer Correct Answer: A) Andy. 18. Why would a country impose a tariff or quota on imported goods? A) To raise the price of imported goods and encourage people to buy local. B) To raise the price of imported goods to help other countries make more money. C) To be mean!. D) None of above. Show Answer Correct Answer: A) To raise the price of imported goods and encourage people to buy local. 19. A ban on trade with a particular country. A) Quota. B) Embargo. C) Tariff. D) Subsidy. Show Answer Correct Answer: B) Embargo. 20. There is a significant increase in official interest rates in Australia. All other things being equal, which of the following would be true? A) The AUS Dollar depreciates against most other currencies. B) The AUS Dollar appreciates against most other countries. C) No change AUS Dollar. D) The US Dollar depreciates against most other currencies. Show Answer Correct Answer: B) The AUS Dollar appreciates against most other countries. 21. The theory of absolute superiority is A) It is the principle that explains the advantage of international trade, that each country has such a good that it can produce more of the good than other countries for the same unit cost. B) Having an absolute advantage in the costs of production of goods completely explains the reasons for the wide spread of foreign trade. C) It is to focus all efforts in the country on the production of goods with relatively high efficiency and export them. D) Is to investigate the reasons for the usefulness of international trade. Show Answer Correct Answer: A) It is the principle that explains the advantage of international trade, that each country has such a good that it can produce more of the good than other countries for the same unit cost. 22. A protective tariff is intended to protect the A) Consumer from higher priced goods produced within the country. B) Manufacturer or farmer from lower priced goods imported into the country. C) Consumer from higher prices on foreign goods. D) Manufacturer from higher prices on materials produced within the country. Show Answer Correct Answer: B) Manufacturer or farmer from lower priced goods imported into the country. 23. Increased foreign competition tend to A) Intensify inflationary pressure at home. B) Induce falling output per worker-hour for domestic workers. C) Place constraints on the wages of domestic workers. D) Increase profits of domestic import-competing industries. Show Answer Correct Answer: C) Place constraints on the wages of domestic workers. 24. Agreement that will eliminate all tariffs and other trade barriers between Canada, Mexico, and the US A) NAFTA. B) ASEAN. C) EU. D) CARICOM. Show Answer Correct Answer: A) NAFTA. 25. Which relationship BEST illustrates a comparison of absolute advantage and comparative advantage? A) A country with an absolute advantage will always have a comparative advantage in producing products. B) A country with a comparative advantage can produce a greater output of a products than a country with an absolute advantage. C) A country with an absolute advantage can produce a product at a lower opportunity cost than a country with a comparative advantage in producing all products. D) A country with a comparative advantage can produce a product at a lower opportunity cost, even if another country has an absolute advantage in the production of all goods. Show Answer Correct Answer: D) A country with a comparative advantage can produce a product at a lower opportunity cost, even if another country has an absolute advantage in the production of all goods. 26. What trade barrier prohibits the import/export of a product? A) Tariff. B) Standard. C) Subsidy. D) Embargo. Show Answer Correct Answer: D) Embargo. 27. This refers to the unrestricted flow of goods and services between countries. A) Trade barriers. B) Trade bloc. C) Free trade. D) Trade. Show Answer Correct Answer: C) Free trade. 28. Which of the following body is not related to the WTO? A) Council of trade in goods. B) Trade Policy Review Body. C) Dispute Settlement Body. D) Exchange Rate Management Body. Show Answer Correct Answer: D) Exchange Rate Management Body. 29. According to the Heckscher-Ohlin model A) Everyone automatically gains from trade. B) The gainers from trade outnumber the losers from trade. C) The scarce factor necessarily gains from trade. D) None of the above. Show Answer Correct Answer: B) The gainers from trade outnumber the losers from trade. 30. Which of the following is NOT a way to overcome deficits in the balance of payments? A) Price control. B) Export promotion. C) Government reserves. D) Devaluation. Show Answer Correct Answer: A) Price control. ← PreviousNext →Related QuizzesEconomics QuizzesFinance QuizzesInternational Economics Quiz 1International Economics Quiz 2International Economics Quiz 3International Economics Quiz 4International Economics Quiz 5International Economics Quiz 7International Economics Quiz 8International Economics Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books