Master International Trade: Benefits, Costs, and Policies

Question 1

Which of the following is **not** a potential benefit of international trade?

Accepted Answer

Increased unemployment

Answer

Increased economic growth

Answer

Lower consumer prices

Answer

Improved technological innovation

Question 2

A tariff is a tax levied on:

Accepted Answer

Imports

Answer

Exports

Answer

Both imports and exports

Answer

Neither imports nor exports

Question 3

A subsidy is a government payment made to:

Accepted Answer

Domestic producers

Answer

Foreign producers

Answer

Consumers

Answer

Exporters

Question 4

Which of these is NOT an advantage of international trade?

Accepted Answer

Increased prices for consumers

Answer

Greater variety of goods for consumers

Answer

More jobs in industries that export goods

Question 5

Which of the following is NOT a potential benefit of international trade?

Accepted Answer

Job losses in some domestic industries

Answer

Increased consumer choices

Answer

Lower prices for goods and services

Answer

Access to new markets

Question 6

What is the primary objective of imposing tariffs?

Accepted Answer

To protect domestic industries from international competition

Answer

To generate revenue for the government

Answer

To encourage exports

Answer

To reduce global trade barriers

Question 7

Which of the following is an example of a non-tariff barrier to trade?

Accepted Answer

Technical regulations and standards

Answer

Import quotas

Answer

Government subsidies to domestic producers

Answer

Import tariffs

Question 8

What is the primary function of the World Trade Organization (WTO)?

Accepted Answer

To promote free trade and reduce trade barriers

Answer

To resolve trade disputes between member nations

Answer

To provide financial aid to developing countries

Answer

To regulate international financial markets

Question 9

Which of the following is a potential drawback of international trade?

Accepted Answer

Job losses

Answer

Increased consumer choice

Answer

Lower prices

Answer

Greater innovation

Question 10

What is the term for a restriction on the quantity of imports allowed?

Accepted Answer

Quota

Answer

Tariff

Answer

Export duty

Answer

Subsidy

Question 11

What is the primary purpose of a quota?

Accepted Answer

To restrict the quantity of imports

Answer

To generate revenue for the government

Answer

To protect domestic businesses

Answer

To promote exports

Question 12

The concept of comparative advantage is based on the principle of:

Accepted Answer

Relative efficiency

Answer

Absolute advantage

Answer

Historical precedent

Answer

Political power

Question 13

What is the primary objective of imposing a tariff on imported goods?

Accepted Answer

Safeguard domestic industries from foreign competition

Answer

Increase government revenue

Answer

Promote exports

Answer

Encourage economic growth

Question 14

Which of the following is an example of a non-tariff barrier to trade?

Accepted Answer

Technical regulations

Answer

Import quotas

Answer

Export subsidies

Answer

Embargoes

Question 15

How does the concept of comparative advantage influence patterns of international trade?

Accepted Answer

It determines which countries specialize in producing specific goods

Answer

It explains differences in living standards across countries

Answer

It guarantees that all countries benefit from trade

Answer

It prevents trade deficits

Question 16

What is the distinction between a trade surplus and a trade deficit?

Accepted Answer

A trade surplus occurs when exports exceed imports, while a trade deficit occurs when imports exceed exports

Answer

A trade surplus occurs when imports exceed exports, while a trade deficit occurs when exports exceed imports

Answer

A trade surplus is always beneficial, while a trade deficit is always harmful

Answer

A trade deficit is always beneficial, while a trade surplus is always harmful

Question 17

Which of the following is a primary advantage of free trade?

Accepted Answer

Lower prices for consumers

Answer

Increased government revenue

Answer

Protection for specific domestic industries

Answer

Reduced economic competition

Question 18

The primary purpose of a tariff is to:

Accepted Answer

Protect domestic industries from foreign competition

Answer

Generate additional government revenue

Answer

Reduce the quantity of imported goods

Answer

Promote exports

Question 19

How does a quota generally affect the price of imported goods?

Accepted Answer

Increases the price

Answer

Decreases the price

Answer

Has no effect on the price

Answer

Can either increase or decrease the price

Question 20

Which of the following is a key objective of providing subsidies?

Accepted Answer

To encourage production of specific goods or services

Answer

To discourage consumption of certain goods or services

Answer

To increase government revenue

Answer

To reduce consumer prices

Question 21

Which of the following is NOT a potential criticism of free trade?

Accepted Answer

It always leads to higher consumer prices

Answer

It can lead to job losses in specific industries

Answer

It can increase economic inequality

Answer

It can contribute to environmental degradation

Question 22

What is the primary function of the World Trade Organization (WTO)?

Accepted Answer

To promote free trade and resolve trade disputes

Answer

To set tariffs and quotas for international trade

Answer

To provide financial assistance to developing countries

Answer

To regulate the global financial system

Question 23

Which of the following is **NOT** a benefit of international trade?

Accepted Answer

Reduced economic growth

Answer

Increased consumer choice

Answer

Lower prices for consumers

Answer

Increased employment in exporting industries

Question 24

A government policy that restricts the quantity of a good that can be imported is called a:

Accepted Answer

Quota

Answer

Tariff

Answer

Subsidy

Answer

Embargo

Question 25

A government payment to businesses to encourage them to produce certain goods is called a:

Accepted Answer

Subsidy

Answer

Tariff

Answer

Quota

Answer

Embargo

Question 26

The process of removing trade barriers between countries is known as:

Accepted Answer

Free trade

Answer

Protectionism

Answer

Mercantilism

Answer

Globalization

Question 27

Define a tariff.

Accepted Answer

A tax levied on imported goods

Answer

A restriction on the quantity of imported goods

Answer

A financial incentive given to exporters

Answer

A complete prohibition on imports

Question 28

What is the primary purpose of a quota?

Accepted Answer

To restrict the quantity of imported goods

Answer

To increase the cost of imported goods

Answer

To subsidize domestic producers

Answer

To encourage exports

Question 29

Describe a subsidy.

Accepted Answer

A financial assistance provided to domestic producers

Answer

A tax imposed on imported goods

Answer

A restriction on the quantity of exported goods

Answer

A prohibition on domestic production

Question 30

Which of the following is not a potential advantage of international trade?

Accepted Answer

Higher unemployment rates

Answer

Increased economic growth

Answer

Enhanced consumer choice

Answer

Lower prices for goods and services

Question 31

State the primary objective of a tariff.

Accepted Answer

To safeguard domestic industries from foreign competition

Answer

To generate revenue for the government

Answer

To stimulate exports

Answer

To boost consumer spending

Question 32

Explain the key difference between a tariff and a quota.

Accepted Answer

A tariff is a tax on imports, while a quota restricts the quantity of imports.

Answer

A tariff is a restriction on imports, while a quota is a tax on exports.

Answer

A tariff and a quota both aim to reduce imports, but a tariff uses a financial disincentive, while a quota uses a physical restriction.

Answer

There is no fundamental difference between a tariff and a quota.

Question 33

Define the concept of comparative advantage.

Accepted Answer

The theory that countries should specialize in producing and exporting goods and services where they have the lowest opportunity cost of production.

Answer

The ability of a country to produce a good or service more efficiently than another country using the same resources.

Answer

The idea that international trade should be restricted to protect domestic industries.

Answer

The belief that all countries can produce all goods and services equally efficiently.

Question 34

Which of the following is a type of non-tariff barrier to trade?

Accepted Answer

Technical regulations

Answer

Quotas

Answer

Subsidies

Answer

Tariffs

Question 35

What is the primary objective of imposing a tariff?

Accepted Answer

To support domestic industries

Answer

To increase imports

Answer

To decrease exports

Answer

To eliminate foreign competition

Question 36

Which of the following is an example of a multilateral trade agreement?

Accepted Answer

World Trade Organization

Answer

North American Free Trade Agreement

Answer

European Union

Answer

Association of Southeast Asian Nations

Question 37

What is the primary purpose of a quota in international trade?

Accepted Answer

To restrict the quantity of goods imported

Answer

To protect domestic industries

Answer

To increase government revenue

Answer

To promote fair trade practices

Question 38

The concept of comparative advantage is based on:

Accepted Answer

Relative cost differences

Answer

Absolute cost differences

Answer

Opportunity cost

Answer

Labor productivity

Question 39

Which of the following is NOT a potential benefit of international trade?

Accepted Answer

Reduced unemployment

Answer

Increased economic growth

Answer

Lower prices for consumers

Answer

Availability of a wider variety of goods for consumers

Question 40

What is the primary purpose of a trade tariff?

Accepted Answer

To protect domestic industries from foreign competition

Answer

To limit the quantity of goods imported into a country

Answer

To generate revenue for the government

Answer

To encourage foreign investment

Question 41

Which trade policy involves setting a limit on the amount of a good that can be imported?

Accepted Answer

Quota

Answer

Tariff

Answer

Subsidy

Answer

Exchange rate control

Question 42

What is a potential negative consequence of international trade?

Accepted Answer

Job losses in certain industries

Answer

Increased economic growth

Answer

Higher prices for consumers

Answer

A shortage of goods available to consumers

Question 43

What is the function of the World Trade Organization (WTO)?

Accepted Answer

To promote free trade and resolve trade disputes

Answer

To establish tariffs and quotas for international trade

Answer

To distribute aid to underdeveloped countries

Answer

To set international labor standards

Question 44

The concept of comparative advantage in international trade suggests that:

Accepted Answer

Countries should specialize in producing goods and services where they have the lowest opportunity cost.

Answer

Countries should exclusively import goods and services.

Answer

Countries should produce every good and service domestically.

Question 45

What is the purpose of an exchange rate in international trade?

Accepted Answer

To determine the value of one currency in relation to another

Answer

To regulate the flow of goods and services between countries

Answer

To control inflation

Answer

To promote economic development

Question 46

What are the potential negative consequences of international trade?

Accepted Answer

Job losses in certain domestic industries

Answer

Increased consumer prices

Answer

Reduced economic growth

Answer

Higher wages for workers

Question 47

What does the 'balance of trade' refer to?

Accepted Answer

The difference in value between a country's exports and imports

Answer

The total value of a country's exports

Answer

The total value of a country's imports

Question 48

How do fluctuations in exchange rates affect international trade?

Accepted Answer

They can make exports more or less expensive in foreign markets, potentially influencing trade volumes

Answer

Exchange rate fluctuations always lead to an increase in exports

Answer

Exchange rate fluctuations have no impact on international trade

Question 49

Which of the following is **not** a primary benefit of international trade?

Accepted Answer

Reduced competition

Answer

Lower prices for consumers

Answer

Increased economic growth

Question 50

Which trade policy involves imposing a tax on goods imported from other countries?

Accepted Answer

Tariff

Answer

Subsidy

Answer

Quota

Answer

Embargo

Question 51

Which of the following is **not** a reason why countries engage in international specialization?

Accepted Answer

Similar levels of economic development

Answer

Historical ties

Answer

Political alliances

Answer

Differences in resource endowments

Question 52

What is the primary objective of the World Trade Organization (WTO)?

Accepted Answer

Promote free and fair trade

Answer

Negotiate peace treaties

Answer

Provide financial aid to developing countries

Question 53

How does a depreciation of a country's currency generally affect its exports?

Accepted Answer

Increased competitiveness

Answer

No change in competitiveness

Answer

Increased imports

Answer

Decreased competitiveness

Question 54

Which of the following is a measure implemented to protect domestic industries from foreign competition?

Accepted Answer

Import quota

Answer

Export subsidy

Answer

Trade agreement

Answer

Free trade zone