This quiz works best with JavaScript enabled. Home > Finance > Economics > International Economics > International Trade > International Trade – Quiz 74 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Trade Quiz 74 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The diagram shows the value of a country's exports and imports of goods over five years.Between which two years did the country have an increase in the value of imports and an improvement in its balance of trade in goods? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5 A) C. B) B. C) A. D) D. Show Answer Correct Answer: A) C. 2. The movement of people from one country to another is called ..... A) Immigration. B) International migration. C) Emigration. D) National migration. Show Answer Correct Answer: B) International migration. 3. It is a theory that a country enjoys a comparative advantage and has greater productivity which means technological difference. A) Comparison advantage. B) Recardian Theory. C) Comparable advantage. D) Absolute advantage. Show Answer Correct Answer: B) Recardian Theory. 4. This theory is attributed to philosopher John Rawls. A) Righteous moralist. B) Justice theories. C) Right theories. D) None of above. Show Answer Correct Answer: B) Justice theories. 5. Initiator of the theory of absolute advantage A) Adam smith. B) David ricardo. C) John smit. D) None of above. Show Answer Correct Answer: A) Adam smith. 6. Which of the following is not a potential consequence of trade protection? A) Lower export competitiveness because of higher costs of production. B) Potential for corruption, for example illegal smuggling. C) Higher costs of production because of higher prices of imported inputs. D) Lower risk of retaliation by other countries. Show Answer Correct Answer: D) Lower risk of retaliation by other countries. 7. What is absolute advantage in international trade? A) A country's ability to produce a good or service at the same efficiency as another country. B) A country's ability to produce a good or service more efficiently than another country. C) A country's ability to produce a good or service less efficiently than another country. D) A country's ability to produce a good or service without considering efficiency. Show Answer Correct Answer: B) A country's ability to produce a good or service more efficiently than another country. 8. Factor endowment is..... A) The amount of change that patterns of trade undergo over time. B) The degree to which the government allows free trade to exist in its international trade. C) The extent to which different countries possess various factors of production. D) The cost of pursuing one activity at the expense of another given alternative activity. Show Answer Correct Answer: C) The extent to which different countries possess various factors of production. 9. Its purpose is to reduce trade barriers and promote international trade. A) Free trade Agreement. B) General Agreement on Tariffs and Trade. C) General Agreement on Trade in Services. D) Preferential Trade Agreements. Show Answer Correct Answer: B) General Agreement on Tariffs and Trade. 10. The transaction method used for making payments between countries; thesimultaneous act of buying one currency and selling the other A) International Finance. B) Currency. C) Trade Failure. D) Foreign Exchange. Show Answer Correct Answer: D) Foreign Exchange. 11. Which of the following will lead to a decrease in a nation's money supply? A) A decrease in income tax rates. B) A decrease in the discount rate. C) An open market purchase of government securities by the central bank. D) An increase in reserve requirements. E) An increase in government expenditures on goods and services. Show Answer Correct Answer: D) An increase in reserve requirements. 12. The value that one currency has compared to another currency is called exchange rate A) True. B) False. Show Answer Correct Answer: A) True. 13. Who or what answers the basic economic questions in a command economy? A) Individuals and Businesses. B) Government. C) Individuals, Businesses, and Government. D) None of above. Show Answer Correct Answer: B) Government. 14. Goods and services are produced in one's home country. A) Import. B) Domestic good. C) Exchange. D) None of above. Show Answer Correct Answer: B) Domestic good. 15. When a country allows trade and becomes an exporter of a good A) Producer surplus from that good rises and consumer surplus from that good falls. B) Producer and consumer surplus from that good rise. C) Producer and consumer surplus from that good fall. D) Producer surplus from the good falls, and consumer surplus from that good rises. Show Answer Correct Answer: A) Producer surplus from that good rises and consumer surplus from that good falls. 16. The correct statement regarding International Trade is..... A) There is nothing that specifically regulates the terms of delivery of goods. B) Administrative management tends to be easier. C) Terms of delivery of goods from the seller to the buyer are stated in Incoterms. D) The payment system is in IDR currency. Show Answer Correct Answer: C) Terms of delivery of goods from the seller to the buyer are stated in Incoterms. 17. It was reported in 2011 that the United States (US) needed to achieve a lower current account deficit. What would help this in the short run? A a protectionist policy B a strong exchange rate C increased private sector spending D investment in the US by multinational firms A) C. B) D. C) B. D) A. Show Answer Correct Answer: D) A. 18. What is one of the primary benefits of international trade? A) Increased tariffs and trade barriers. B) Reduced economic growth. C) Expansion of markets and increased access to goods and services. D) Limited cultural exchange. Show Answer Correct Answer: C) Expansion of markets and increased access to goods and services. 19. Banks use the major portion of the deposits to ..... A) Extend loans. B) Invest in infrastructure. C) Deposit in foreign banks. D) None of the above. Show Answer Correct Answer: A) Extend loans. 20. A business decides to borrow money from a bank to invest in new equipment that will increase its output. This is a A) Leakage, investment. B) Injection, investment. C) Leakage, savings. D) Injection, consumption. Show Answer Correct Answer: B) Injection, investment. 21. Assuming that, In the United States it takes 5 hours of labors to produce a ton of potatoes and 10 to produce a ton of coal. In Canada, it takes 6 hours of labors to produce a ton of potatoes and 9 to produce a ton of coal. According to the theory of comparative advantage, A) The United States should export coal to Canada and import potatoes from Canada. B) The United States should export potatoes to Canada and import coal from Canada. C) The United States should import both potatoes and coal from Canada, while concentrating on production of more valuable goods. D) There would be no basis for trade. Show Answer Correct Answer: B) The United States should export potatoes to Canada and import coal from Canada. 22. Political risk also called as ..... A) Crucial risk. B) Country risk. C) Cash risk. D) Contractual risk. Show Answer Correct Answer: B) Country risk. 23. Define the collecting bank. A) Collecting bank's role is to take prompt action in forwarding the goods with the buyer's instructions to a remitting bank. The collecting bank normally chooses the remitting bank, but the buyer may specify the bank to which the documents are to be sent. The collecting bank prepares a covering forms called the collection instruction for collection order) to forward the documents to the collecting bank and for giving its instructions. B) Collecting bank's role is to take prompt action in forwarding the documents with the seller's instructions to a remitting bank. The collecting bank normally chooses the remitting bank, but the seller may specify the bank to which the documents are to be sent. The collecting bank prepares a covering schedule called the collection instruction for collection order) to forward the documents to the collecting bank and for giving its instructions. C) Collecting bank's role is to take prompt action in forwarding the goods with the seller's instructions to a remitting bank. The collecting bank normally chooses the remitting bank, but the seller may specify the bank to which the goods are to be sent. The collecting bank prepares a covering schedule called the collection instruction for collection order) to forward the goods to the collecting bank and for giving its instructions. D) All the above. Show Answer Correct Answer: B) Collecting bank's role is to take prompt action in forwarding the documents with the seller's instructions to a remitting bank. The collecting bank normally chooses the remitting bank, but the seller may specify the bank to which the documents are to be sent. The collecting bank prepares a covering schedule called the collection instruction for collection order) to forward the documents to the collecting bank and for giving its instructions. 24. An Older economic policy A) Free Trade. B) Protectionism. Show Answer Correct Answer: B) Protectionism. 25. A contract between the buyer and the seller. A) Bill of sale. B) Purchase agreement. C) Invoice. D) Bill of lading. Show Answer Correct Answer: B) Purchase agreement. 26. Government payments to a local supplier to reduce the supplier costs. This helps local businesses survive because it is getting direct aid from the federal government. What is this called? A) Subsidy. B) Protectionism. C) Balance of trade. D) Exchange rate. Show Answer Correct Answer: A) Subsidy. 27. Compared with Pakistan, Germany has a higher output of pharmaceuticals per unit of resources used. What could explain this? A the existence of floating exchange rates B the law of absolute advantage C the Marshall-Lerner condition D the terms of trade A) A. B) D. C) C. D) B. Show Answer Correct Answer: D) B. 28. According to the Buy America Act, if a company wishes to win a contract from a U.S. government agency to provide some equipment, it must ensure that at least 51 percent of the product by value is manufactured in the United States. This is an example of:contract from a U.S. government agency to provide some equipment, it must ensure that at least 51 percent of the product by value ismanufactured in the United States. This is an example of: A) Anti dumping duties. B) Import quotas. C) Local content requirements. D) Voluntary export restraint. Show Answer Correct Answer: C) Local content requirements. 29. The more trade we have with another country, the higher the unemployment rate. A) True. B) False. Show Answer Correct Answer: B) False. 30. ..... is the term used to express the economic reality of the benefits from trade that result from differences in resources and technology for individuals, businesses, or nations. A) Historical contingency. B) Comparative advantage. C) Sheer accident. D) None of above. Show Answer Correct Answer: B) Comparative advantage. ← 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