International Trade: A Comprehensive Guide for Business and Finance Students

Question 1

What is a potential negative impact of international trade?

Accepted Answer

Job losses in certain industries or areas

Accepted Answer

Increased pollution and carbon emissions from production and transportation

Answer

Overall economic growth and improved well-being

Question 2

According to the Heckscher-Ohlin Model, a country will export goods that require factors of production in which it is

Accepted Answer

Abundant and cheap

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Scarce and expensive

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Equally distributed

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Highly skilled

Question 3

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

Accepted Answer

Increased consumer choice

Answer

Increased government revenue

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Guaranteed job security

Answer

Reduced environmental concerns

Question 4

The concept of comparative advantage suggests that countries should:

Accepted Answer

Specialize in producing and exporting goods where they have the greatest efficiency

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Produce all goods domestically, regardless of their relative efficiency

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Protect domestic industries from foreign competition

Answer

Negotiate trade agreements that favor their own exports

Question 5

Which of the following is a measure of a country's level of international trade engagement?

Accepted Answer

Export-to-GDP ratio

Answer

Trade balance

Answer

GDP per capita

Answer

Consumer Price Index

Question 6

What is the primary benefit of international trade for a country?

Accepted Answer

Promotes economic growth

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Ensures lower prices for consumers

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Raises living standards

Answer

Decreases unemployment

Question 7

What are the primary ethical considerations in international trade?

Accepted Answer

Labor standards, environmental protection, and cultural preservation

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Trade imbalances between nations

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The World Trade Organization's role

Question 8

Which of the following is NOT considered a factor that influences international trade?

Accepted Answer

Personal preferences

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Economic growth

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Government regulations

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Technological advancements

Question 9

Which of the following is NOT an advantage of international trade specialization?

Accepted Answer

Reduced consumer choice

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Increased efficiency

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Lower production costs

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Enhanced quality of products

Question 10

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

Accepted Answer

To negotiate and enforce trade agreements

Answer

To provide financial assistance to developing countries

Answer

To promote world peace and security

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To regulate environmental standards

Question 11

What does Gross Domestic Product (GDP) measure?

Accepted Answer

The total value of goods and services produced within a country's borders

Answer

The total income earned by individuals and businesses within a country

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The value of a country's exports minus its imports

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The difference between a country's government revenue and expenditure

Question 12

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

Accepted Answer

Reduced economic growth

Answer

Increased consumer choice

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Lower prices for consumers

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Access to new technologies

Question 13

How do evolving consumer preferences and technological innovations shape international trade?

Accepted Answer

They drive specialization and interdependence among countries, influencing trade patterns and the types of goods traded.

Answer

Consumer preferences alone determine the goods traded, while technology only enhances production.

Answer

Consumer preferences have no impact on trade; technology alone creates export opportunities.

Answer

Neither factor influences trade; government policies solely dictate trade flows.

Question 14

What economic indicator measures the total value of a country's exported goods and services minus the total value of its imported goods and services?

Accepted Answer

Balance of trade

Answer

Balance of payments

Answer

GDP

Answer

CPI

Question 15

According to the theory of comparative advantage, countries should focus on producing and exporting goods that:

Accepted Answer

They can produce more efficiently than other countries

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They have a higher demand for

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They have the most natural resources for

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They can produce with a larger labor force

Question 16

Which of the following is a prominent international organization that regulates and facilitates global trade?

Accepted Answer

The World Trade Organization

Answer

The United Nations

Answer

The World Bank

Answer

The European Union

Question 17

What term describes a government policy that restricts the import or export of goods?

Accepted Answer

Protectionism

Answer

Free trade

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Mercantilism

Answer

Laissez-faire

Question 18

What is the term for a tax levied on imported goods?

Accepted Answer

Tariff

Answer

Quota

Answer

Embargo

Answer

Sanction

Question 19

What term refers to the movement of capital across national borders?

Accepted Answer

Foreign direct investment

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International trade

Answer

Remittances

Answer

Currency exchange

Question 20

Which of the following is a defining characteristic of a multinational corporation?

Accepted Answer

Operations in multiple countries

Answer

Government ownership

Answer

Stock exchange listing

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Monopoly in a specific industry

Question 21

According to the Heckscher-Ohlin model, countries with a relatively large endowment of capital will tend to export:

Accepted Answer

Capital-intensive goods

Answer

Labour-intensive goods

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Raw materials

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Services

Question 22

Which international organisation is responsible for setting and enforcing rules governing global trade?

Accepted Answer

World Trade Organization

Answer

United Nations

Answer

World Bank

Answer

International Monetary Fund

Question 23

What is the term for when a country's exports are greater than its imports?

Accepted Answer

Trade surplus

Answer

Trade deficit

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Balance of trade

Answer

Current account deficit

Question 24

Which of the following is NOT a type of trade policy?

Accepted Answer

Currency devaluation

Answer

Protectionism

Answer

Free trade

Answer

Mercantilism

Question 25

What is the purpose of a floating exchange rate regime?

Accepted Answer

To allow the value of a currency to be determined by market forces

Answer

To prevent inflation

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To encourage economic growth

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To promote stability in financial markets

Question 26

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

Accepted Answer

Increased government revenue

Answer

Increased efficiency in production

Answer

Lower prices for consumers

Answer

Increased job opportunities

Question 27

The elasticity of demand for imports measures the:

Accepted Answer

Responsiveness of import demand to changes in relative prices

Answer

Responsiveness of import demand to changes in domestic income

Answer

Responsiveness of import demand to changes in domestic prices

Answer

Responsiveness of import demand to changes in exchange rates

Question 28

How does international trade promote innovation and technological advancements?

Accepted Answer

It intensifies competition, driving product innovation.

Accepted Answer

It expands market size, justifying investments in research.

Accepted Answer

It enables technology transfer and knowledge exchange.

Question 29

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

Accepted Answer

Depletion of domestic resources

Answer

Lower consumer prices for imported goods

Answer

Increased economic growth and job creation

Question 30

What is the term used to describe the movement of goods and services out of a country?

Accepted Answer

Exports

Answer

Quotas

Answer

Tariffs

Answer

Imports

Question 31

Which of the following is a type of government intervention that can restrict international trade?

Accepted Answer

Tariffs

Answer

Inflation rates

Answer

Foreign exchange rates

Question 32

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

Accepted Answer

To promote free and fair international trade

Answer

To provide financial aid to developing countries

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To negotiate trade agreements between countries

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To regulate international trade in specific industries

Question 33

What is the term for the total value of all goods and services produced within a country's borders in a given year?

Accepted Answer

Gross Domestic Product (GDP)

Answer

Consumer Price Index

Answer

Balance of Payments

Answer

Foreign Direct Investment

Question 34

Which of the following factors has played a significant role in driving the expansion of international trade in recent decades?

Accepted Answer

Technological advancements in communication and transportation

Answer

Rising inflation rates

Answer

Increased protectionism

Answer

Decreased government regulation

Question 35

What is the term used to describe the difference between a country's exports and imports?

Accepted Answer

Trade Balance

Answer

Balance of Payments

Answer

Current Account

Question 36

Critics of free trade argue that it can lead to:

Accepted Answer

Job losses in certain industries

Answer

Benefits for all countries involved

Answer

Reduced consumer choice

Answer

Increased economic growth and prosperity

Question 37

What is the term used to describe the value of a country's currency relative to other currencies?

Accepted Answer

Exchange Rate

Answer

Interest Rate

Answer

Inflation Rate

Question 38

Which of the following is a well-known benefit of international trade?

Accepted Answer

Increased specialization and efficiency, leading to lower production costs and potentially lower consumer prices.

Answer

Reduced competition in the domestic market, potentially leading to higher prices for consumers.

Answer

Lower consumer prices in the short term, but potentially higher prices in the long term due to reduced domestic production.

Answer

Job losses in certain domestic industries due to increased competition from foreign producers.

Question 39

According to the theory of comparative advantage, countries should specialize in producing and exporting goods where they have a(n):

Accepted Answer

Lower opportunity cost relative to other countries.

Answer

Higher absolute advantage, even if the opportunity cost is higher.

Answer

Larger domestic market for the goods.

Answer

Lower production costs, regardless of the opportunity cost.

Question 40

A tariff can be defined as a government-imposed tax on:

Accepted Answer

Imported goods, intended to protect domestic producers from foreign competition.

Answer

Services, such as consulting or financial services.

Answer

Domestically produced goods, aimed at raising tax revenue.

Answer

Exported goods, designed to generate revenue for the government.

Question 41

The World Trade Organization (WTO) promotes international trade primarily through:

Accepted Answer

Negotiation of trade agreements, setting rules for global trade, and resolving trade disputes between member countries.

Answer

Setting tariffs and quotas to regulate the flow of goods and services across borders.

Answer

Providing financial assistance to developing countries to facilitate their participation in international trade.

Question 42

Which of the following factors has been a significant contributor to the growth of international trade in recent decades?

Accepted Answer

Globalization and technological advancements, such as improved transportation, communication, and digital technologies.

Answer

Reduced demand for imported goods, resulting in a decline in international trade.

Answer

Increased transportation costs, making it more expensive to move goods across borders.

Answer

Increased government protectionism, leading to reduced trade barriers and increased trade flows.

Question 43

Foreign direct investment (FDI) refers to:

Accepted Answer

Investment by a company in establishing or expanding a business operation in a different country.

Answer

Investment in a foreign stock market, involving the purchase of shares in companies listed on a foreign exchange.

Answer

Loans provided to foreign governments, typically for development projects or infrastructure investments.

Question 44

The concept of elasticity of demand in international trade refers to:

Accepted Answer

The responsiveness of the quantity of a good or service demanded to changes in its price, indicating how consumers adjust their consumption based on price fluctuations.

Answer

The rate at which the supply of a good or service increases in response to changes in its price, showing how producers adjust their production based on price signals.

Answer

The total revenue generated from the sale of a good or service, considering both price and quantity sold.

Question 45

The International Monetary Fund (IMF) plays a critical role in:

Accepted Answer

Promoting international monetary cooperation, facilitating the orderly functioning of the global monetary system, and providing financial assistance to countries facing economic difficulties.

Answer

Resolving trade disputes between countries, mediating negotiations and enforcing trade agreements.

Answer

Setting exchange rates and managing currency reserves, determining the value of currencies relative to each other.

Answer

Providing financial assistance to developing countries, focusing on long-term economic development and poverty reduction.

Question 46

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

Accepted Answer

To facilitate and regulate international trade among member countries

Answer

To provide humanitarian aid to developing countries

Answer

To set monetary policy for the global economy

Answer

To resolve disputes between member states

Question 47

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

Accepted Answer

Increased economic inequality

Answer

Increased availability of goods and services

Answer

Lower consumer prices

Answer

Enhanced technological development

Question 48

What is the term used to describe the difference in value between a country's exports and imports?

Accepted Answer

Trade balance

Answer

Balance of payments

Answer

Currency exchange rate

Answer

Gross domestic product

Question 49

Which of the following is a primary determinant of a country's comparative advantage in producing a particular good?

Accepted Answer

Relative factor endowments and production costs

Answer

Population size

Answer

Currency value

Answer

Abundance of natural resources

Question 50

What is the name of the economic theory that explains the pattern of international trade based on differences in factor endowments and relative costs?

Accepted Answer

Heckscher-Ohlin theory

Answer

Ricardian model

Answer

Mercantilism

Answer

Monetarism

Question 51

Which of the following is a commonly used trade barrier?

Accepted Answer

Tariffs

Answer

Economic integration

Answer

Common markets

Answer

Free trade agreements

Question 52

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

Accepted Answer

Higher prices for consumers and reduced economic efficiency

Answer

Increased economic growth

Answer

Reduced unemployment

Answer

Improved environmental sustainability

Question 53

What is the name of the economic model that examines the impact of trade on the distribution of income within a country?

Accepted Answer

Specific-factors model

Answer

Gravitational model

Answer

Standard trade model

Answer

New trade theory model

Question 54

Which of the following is an example of a multinational corporation?

Accepted Answer

Google LLC

Answer

Central bank

Answer

Local school district

Answer

National healthcare system