International Trade Policy: Definition and Objectives for Economic Growth

Question 1

Which of these is NOT a primary objective of international trade policy?

Accepted Answer

Shielding specific domestic industries

Answer

Boosting economic growth

Answer

Creating jobs

Answer

Improving consumer choices

Question 2

Which of the following is NOT considered as a primary objective of international trade policy?

Accepted Answer

Reducing income disparity

Answer

Promoting economic growth

Answer

Increasing employment opportunities

Answer

Enhancing consumer welfare

Question 3

One of the advantages of engaging in international trade includes:

Accepted Answer

Increased market rivalry and innovation

Answer

Lower government expenditures

Answer

Reduced taxation

Question 4

Which of the following is a commonly encountered challenge associated with international trade?

Accepted Answer

Job displacement

Answer

Enhanced productivity

Answer

Reduced economic expansion

Answer

Lower consumer prices

Question 5

An indicator used to measure the restrictiveness of a country's trade policy is known as:

Accepted Answer

Trade restrictiveness index

Answer

Trade openness index

Answer

Human development index

Answer

Economic freedom index

Question 6

A primary aim of the World Trade Organization (WTO) is to:

Accepted Answer

Reduce trade barriers

Answer

Promote economic inequality

Answer

Hinder international cooperation

Answer

Increase government spending

Question 7

One of the fundamental principles enshrined in the General Agreement on Tariffs and Trade (GATT) is:

Accepted Answer

Most-favored-nation treatment

Answer

Protectionism

Answer

Unilateralism

Answer

Retaliation

Question 8

One of the potential benefits of regional trade agreements is:

Accepted Answer

Increased trade and investment

Answer

Growing economic inequality

Answer

Higher prices for consumers

Answer

Reduced competition

Question 9

Which of the following is NOT a primary objective of international trade policy?

Accepted Answer

Impeding job creation

Answer

Creating jobs

Answer

Enhancing consumer welfare

Answer

Promoting economic growth

Question 10

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

Accepted Answer

Increased specialization leading to greater efficiency

Answer

Guaranteed higher consumer prices

Answer

Increased unemployment

Answer

Reduced competition in domestic markets

Question 11

Which of the following is a type of trade barrier that directly restricts the amount of a good imported?

Accepted Answer

Quotas

Answer

Tariffs

Answer

Subsidies

Answer

Currency devaluation

Question 12

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

Accepted Answer

To facilitate and regulate international trade by promoting free trade

Answer

To resolve trade disputes between member countries

Answer

To provide financial assistance to developing countries

Question 13

Which of the following is a key concept in international trade theory that explains why countries should specialize in producing goods where they have a lower opportunity cost?

Accepted Answer

Comparative advantage

Answer

Protectionism

Answer

Absolute advantage

Answer

Gains from trade

Question 14

What is the main difference between a tariff and a quota?

Accepted Answer

A tariff is a tax on imported goods, while a quota sets a limit on the quantity of imported goods.

Answer

Tariffs are paid by exporters, while quotas are paid by consumers.

Answer

Tariffs are more effective in restricting trade than quotas.

Question 15

Which of the following is a potential consequence of protectionist trade policies?

Accepted Answer

Increased prices for consumers

Answer

Accelerated economic growth

Answer

Increased competition in domestic markets

Answer

Improved economic efficiency

Question 16

What is the role of exchange rates in international trade?

Accepted Answer

They determine the relative prices of goods and services traded between countries.

Answer

They are fixed by governments.

Answer

They prevent countries from engaging in international trade.

Question 17

Which of the following is a potential benefit of free trade?

Accepted Answer

Increased competition, leading to lower prices and higher quality goods

Answer

Reduced economic growth

Answer

Limited consumer choice

Answer

Increased unemployment

Question 18

How can international trade contribute to economic growth?

Accepted Answer

By promoting specialization, increasing efficiency, and fostering innovation

Answer

International trade always leads to economic growth, regardless of other factors.

Answer

Economic growth is independent of international trade.

Question 19

A primary objective of international trade policy is to:

Accepted Answer

Promote economic growth

Answer

Protect national security

Answer

Reduce income inequality

Answer

Eliminate global poverty

Question 20

How does international trade contribute to the creation of jobs?

Accepted Answer

By expanding export markets for domestic firms

Answer

By reducing government spending

Answer

By increasing consumer debt

Answer

By eliminating foreign imports

Question 21

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

Accepted Answer

Higher prices

Answer

Increased product variety

Answer

Lower prices

Answer

Improved quality

Question 22

The term 'tariff' refers to:

Accepted Answer

A tax on goods imported from other countries

Answer

A subsidy provided to domestic exporters

Answer

A quantitative restriction on imports

Answer

A fixed exchange rate

Question 23

What is the primary purpose of a trade agreement?

Accepted Answer

To reduce trade barriers between participating countries

Answer

To establish a common currency between participating countries

Answer

To increase trade barriers between participating countries

Question 24

A potential drawback of international trade is:

Accepted Answer

Job losses in certain sectors

Answer

Benefits all countries involved equally

Answer

Always promotes economic growth

Answer

Reduces global economic inequality

Question 25

The key difference between a free trade area and a customs union is that:

Accepted Answer

A customs union has a common external tariff, while a free trade area does not.

Answer

A free trade area has a common currency.

Answer

A free trade area is larger than a customs union.

Question 26

Which international organization is primarily responsible for promoting free trade?

Accepted Answer

World Trade Organization

Answer

International Monetary Fund

Answer

United Nations

Answer

World Bank

Question 27

The concept of comparative advantage suggests that:

Accepted Answer

Countries should specialize in producing and exporting goods where they have a lower opportunity cost.

Answer

Countries should produce all goods domestically, even if they are less efficient at producing them.

Answer

Countries should only import goods that are not available domestically.

Question 28

Identify the incorrect primary objective of international trade policy.

Accepted Answer

Increase national debt

Answer

Enhance consumer well-being

Answer

Foster economic growth

Answer

Create employment opportunities

Question 29

Which tool is commonly employed to implement international trade policy?

Accepted Answer

Tariffs

Answer

Fiscal policy

Answer

Immigration policy

Answer

Monetary policy

Question 30

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

Accepted Answer

Restricting the volume of imports or exports

Answer

Stimulating the production of a specific good

Answer

Raising the price of a particular good

Question 31

Identify a potential benefit of free trade.

Accepted Answer

Lower prices for consumers

Answer

Reducing competition

Answer

Protecting domestic industries

Answer

Increasing government revenue

Question 32

Upon what principle is the concept of comparative advantage based?

Accepted Answer

Relative production efficiency of countries

Answer

Absolute production cost

Answer

Demand for goods in different countries

Question 33

Which international organization is primarily responsible for promoting free trade?

Accepted Answer

World Trade Organization (WTO)

Answer

United Nations (UN)

Answer

International Monetary Fund (IMF)

Answer

World Bank

Question 34

Explain the significance of economic integration in international trade.

Accepted Answer

Reduces trade barriers and creates a larger market

Answer

Undermines the competitiveness of domestic firms

Answer

Increases government control over the economy

Question 35

Identify a potential negative consequence of international trade.

Accepted Answer

Job displacement in certain industries

Answer

Increased economic growth

Answer

Improved consumer well-being

Answer

Reduced inflation

Question 36

How does international trade potentially affect income distribution within countries?

Accepted Answer

May lead to increased inequality

Answer

Always reduces inequality

Answer

Has no significant impact on inequality

Answer

Always increases equality

Question 37

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

Accepted Answer

Increased Competition

Answer

Reduced Consumer Choice

Answer

Decreased Innovation

Answer

Decreased Competition

Question 38

Which type of trade policy promotes free trade and reduces trade barriers?

Accepted Answer

Free Trade

Answer

Mercantilism

Answer

Globalization

Answer

Protectionism

Question 39

What is the primary purpose of tariffs in international trade?

Accepted Answer

Imposing Taxes on Imported Goods

Answer

Promoting Technological Innovation

Answer

Providing Insurance to Exporters

Answer

Limiting Foreign Investment

Question 40

Which of the following is a potential negative consequence of trade barriers?

Accepted Answer

Reduced Consumer Choice

Answer

Increased Economic Efficiency

Answer

Increased Investment

Answer

Lower Consumer Prices

Question 41

What is the main goal of the World Trade Organization (WTO)?

Accepted Answer

To Promote Free and Fair Trade

Answer

To Protect Human Rights

Answer

To Regulate International Finance

Answer

To Provide Military Assistance

Question 42

Which of the following is a component of economic welfare?

Accepted Answer

Standard of Living

Answer

Unemployment Rate

Answer

Defense Spending

Answer

Foreign Exchange Reserves

Question 43

Which of the following is a primary objective of international trade policy?

Accepted Answer

Promoting economic growth by expanding markets for domestic producers and fostering innovation and competition

Answer

Reducing inflation by controlling the flow of goods and services across borders

Answer

Restricting imports to protect domestic industries from foreign competition

Answer

Maintaining a favorable balance of payments by limiting imports and encouraging exports

Question 44

International trade can contribute to economic growth by:

Accepted Answer

Expanding markets for domestic producers, allowing them to increase production, create jobs, and utilize economies of scale.

Answer

Limiting consumer choice by restricting the availability of foreign goods and services.

Answer

Decreasing interest rates by influencing monetary policy and the cost of borrowing.

Answer

Reducing government spending by decreasing the need for subsidies and protectionist measures.

Question 45

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

Accepted Answer

Higher prices for consumers due to increased import costs and reduced competition.

Answer

Economic growth through increased exports, job creation, and technological advancements.

Answer

Increased job opportunities in export-oriented industries and related sectors.

Answer

Enhanced consumer welfare by providing access to a wider variety of goods and services at lower prices.

Question 46

Which of the following is a key principle of free trade?

Accepted Answer

The elimination of trade barriers such as tariffs, quotas, and subsidies, allowing for the free flow of goods and services across borders.

Answer

The substitution of domestic production for imports to reduce reliance on foreign goods.

Answer

The active intervention of governments in trade to manage and control economic outcomes.

Answer

The protection of domestic industries through government policies and measures to restrict foreign competition.

Question 47

Which of the following is a potential consequence of protectionist trade policies?

Accepted Answer

Higher prices for consumers due to reduced competition and increased import costs, leading to a decrease in purchasing power.

Answer

Increased exports by making domestic industries more competitive in foreign markets.

Answer

Improved economic efficiency by reducing reliance on imported goods and services.

Answer

Enhanced competitiveness of domestic industries by shielding them from foreign competition.

Question 48

The concept of comparative advantage suggests that countries should:

Accepted Answer

Specialize in producing and exporting goods where they have the lowest opportunity cost, allowing for efficient resource allocation and increased global production.

Answer

Produce all goods domestically, even if it is less efficient than importing them.

Answer

Focus on producing goods that they are unable to produce efficiently.

Answer

Protect domestic industries from foreign competition, regardless of cost or efficiency.

Question 49

Which of the following is a goal of the World Trade Organization (WTO)?

Accepted Answer

To promote free trade, reduce trade barriers, and resolve trade disputes among member countries.

Answer

To set environmental standards and regulations for international trade practices.

Answer

To provide aid and assistance to developing countries seeking to improve their economic conditions.

Answer

To regulate global financial markets and ensure financial stability.

Question 50

Which of the following is a type of trade barrier?

Accepted Answer

A tariff, which is a government-imposed tax or duty on imported goods and services.

Answer

Free trade, which involves the absence of government-imposed restrictions on trade.

Answer

Economic growth, which can lead to increased trade and prosperity.

Answer

Comparative advantage, which refers to the concept of specializing in producing goods where a country is most efficient.

Question 51

Which of the following is a potential benefit of regional trade agreements?

Accepted Answer

Increased trade volume among member countries due to reduced tariffs and other trade barriers, leading to expanded markets and increased economic growth.

Answer

Higher prices for consumers due to reduced competition and increased import costs.

Answer

Increased trade deficits due to an increase in imports from member countries.

Answer

Reduced economic growth due to a shift in production towards less efficient producers within the region.