Master International Economics: Quiz Yourself on Global Trade and Finance

Question 1

What is the term used to describe the situation when one country can produce a good or service more efficiently than another country?

Accepted Answer

Comparative advantage

Answer

Absolute advantage

Answer

Competitive advantage

Answer

Market advantage

Question 2

What is the term for the total value of goods and services produced in a country over a specific period?

Accepted Answer

Gross domestic product (GDP)

Answer

Gross national product (GNP)

Answer

Balance of trade

Answer

Currency value

Question 3

Which of the following is NOT included in the calculation of GDP?

Accepted Answer

Imports

Answer

Consumption spending

Answer

Government spending

Answer

Investment

Question 4

How is GDP related to economic growth?

Accepted Answer

Economic growth leads to an increase in GDP.

Answer

GDP measures economic growth.

Answer

GDP is not related to economic growth.

Answer

Economic growth leads to a decrease in GDP.

Question 5

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

Accepted Answer

To promote free and fair trade

Answer

To negotiate peace treaties between nations

Answer

To regulate the global banking system

Answer

To provide humanitarian aid to developing countries

Question 6

Define a tariff.

Accepted Answer

A tax on imported goods

Answer

A subsidy for domestic industries

Answer

A fee for exporting goods

Answer

A ban on foreign investment

Question 7

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

Accepted Answer

Increased self-sufficiency

Answer

Increased economic growth

Answer

Lower consumer prices

Answer

Greater access to specialized goods and services

Question 8

What is the name of the international organization that promotes cooperation on monetary and financial issues?

Accepted Answer

International Monetary Fund (IMF)

Answer

World Trade Organization (WTO)

Answer

United Nations Economic and Social Council (ECOSOC)

Answer

World Bank

Question 9

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

Accepted Answer

Balance of trade

Answer

Gross domestic product (GDP)

Answer

Trade surplus

Answer

Trade deficit

Question 10

Which type of trade policy aims to reduce restrictions on the exchange of goods and services?

Accepted Answer

Free trade

Answer

Protectionism

Answer

Mercantilism

Answer

Autarky

Question 11

What is the primary purpose of the World Bank?

Accepted Answer

To provide financial assistance to developing countries

Answer

To regulate international trade

Answer

To protect human rights

Answer

To resolve trade disputes

Question 12

Which of these is NOT an advantage of international trade?

Accepted Answer

Greater economic dependence among countries

Answer

Lower consumer prices

Answer

Wider choices of goods and services

Answer

Specialization in production

Question 13

What do we call the exchange of goods and services between different countries?

Accepted Answer

International trade

Answer

Import

Answer

Export

Answer

Tariff

Question 14

What is a trade deficit?

Accepted Answer

When a country imports more than it exports

Answer

When a country exports more than it imports

Answer

When a country's trade balance is zero

Answer

When a country's currency value decreases

Question 15

What is the core objective of sustainable development?

Accepted Answer

Meeting the needs of the present without sacrificing the ability of future generations to meet their own needs

Answer

Achieving the highest possible economic growth

Answer

Reducing global inequality

Answer

Promoting political stability

Question 16

What is the term that describes the value of a country's exports minus the value of its imports?

Accepted Answer

Balance of trade

Answer

Gross domestic product

Answer

Current account

Answer

Net national income

Question 17

What is the main goal of the North American Free Trade Agreement (NAFTA)?

Accepted Answer

To create a free trade zone between the United States, Canada, and Mexico

Answer

To increase political cooperation between the three countries

Answer

To reduce illegal immigration

Answer

To establish a common currency

Question 18

Which of the following is **not** an advantage of international trade?

Accepted Answer

Higher rates of unemployment

Answer

Lower prices for customers

Answer

Expanded variety of products

Answer

Greater competition among businesses

Question 19

Which of the following measures the general price level within an economy?

Accepted Answer

Consumer Price Index (CPI)

Answer

Gross Domestic Product (GDP)

Answer

Dow Jones Industrial Average

Answer

Unemployment rate

Question 20

How do exchange rates impact international trade?

Accepted Answer

Exchange rate fluctuations can affect the price of imports and exports

Answer

Exchange rates have no bearing on trade

Answer

Exchange rates always favor one country over another

Answer

Exchange rates remain constant and do not fluctuate

Question 21

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

Accepted Answer

A trade surplus occurs when a country exports more than it imports, while a trade deficit occurs when it imports more than it exports

Answer

A trade deficit occurs when a country exports more than it imports, while a trade surplus occurs when it imports more than it exports

Answer

There is no difference between a trade surplus and a trade deficit

Answer

A trade deficit is always a negative outcome for a country

Question 22

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

Accepted Answer

Reduced environmental protection

Answer

Lower prices for consumers

Answer

Increased economic growth

Answer

Greater variety of goods and services

Question 23

What is the primary purpose of the World Bank?

Accepted Answer

To promote economic development in developing countries

Answer

To regulate international trade

Answer

To provide disaster relief

Answer

To facilitate global financial stability

Question 24

What is a tariff?

Accepted Answer

A tax on imported goods

Answer

A government subsidy for domestic producers

Answer

A quota on imports

Answer

An agreement to reduce trade barriers

Question 25

What is a fundamental distinction between developed and developing countries?

Accepted Answer

Level of economic development and infrastructure

Answer

Political stability

Answer

Population density

Answer

Geographic location

Question 26

What term best describes the exchange of goods and services across national borders?

Accepted Answer

International trade

Answer

Global economy

Answer

Interdependence

Answer

Export and import

Question 27

Which international organization is dedicated to fostering economic cooperation among its member nations?

Accepted Answer

World Trade Organization (WTO)

Answer

North American Free Trade Agreement (NAFTA)

Answer

World Economic Forum (WEF)

Answer

European Union (EU)

Question 28

How can exports be differentiated from imports?

Accepted Answer

Exports are products sold to other countries, while imports are products bought from other countries.

Answer

Imports are products sold to other countries, while exports are products bought from other countries.

Answer

Both exports and imports involve the movement of goods between countries.

Answer

There is no distinction between exports and imports.

Question 29

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

Accepted Answer

To increase consumer prices

Answer

To access goods and services not available domestically

Answer

To increase economic growth

Answer

To create jobs

Question 30

Tariffs and quotas are examples of government measures used to:

Accepted Answer

Protect domestic industries from foreign competition

Answer

Promote exports and increase foreign exchange earnings

Answer

Reduce government spending and lower taxes

Answer

Control inflation and stabilize the economy

Question 31

The concept of comparative advantage suggests that countries should specialize in producing and exporting goods and services where they have:

Accepted Answer

The lowest production costs

Answer

The highest quality standards

Answer

The largest domestic market

Answer

The most advanced technology

Question 32

Economic sanctions are:

Accepted Answer

Government-imposed restrictions on economic activities

Answer

International agreements to promote trade

Answer

Financial assistance provided by international organizations

Answer

Measures to reduce government debt

Question 33

The concept of comparative advantage suggests that countries should:

Accepted Answer

Produce and export goods that they can produce more efficiently

Answer

Protect their domestic industries from international competition

Answer

Avoid trade with countries that have a lower cost of living

Answer

Focus on producing goods that they consume domestically

Question 34

Which of the following measures a country's involvement in the global economy?

Accepted Answer

Trade as a percentage of GDP

Answer

GDP per capita

Answer

Literacy rate

Answer

Infant mortality rate

Question 35

The International Monetary Fund (IMF) primarily:

Accepted Answer

Provides loans to countries facing economic difficulties

Answer

Monitors global economic trends

Answer

Encourages free trade between member countries

Answer

Sets interest rates for member countries

Question 36

The North American Free Trade Agreement (NAFTA) is an example of a:

Accepted Answer

Regional trade agreement

Answer

Multilateral trade agreement

Answer

Bilateral trade agreement

Answer

International investment agreement

Question 37

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

Accepted Answer

To regulate trade flows between member countries

Answer

To provide financial assistance to developing countries

Answer

To promote peace and security among member countries

Answer

To coordinate global monetary policy

Question 38

Which of the following is a measure of the VALUE of goods and services exported and imported by a country?

Accepted Answer

Balance of trade

Answer

Gross domestic product (GDP)

Answer

Gross national income (GNI)

Answer

Foreign exchange reserves

Question 39

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

Accepted Answer

A tariff is a tax on imported goods, while a quota is a LIMIT on the quantity of goods that can be imported.

Answer

A quota is a tax on imported goods, while a tariff is a LIMIT on the quantity of goods that can be imported.

Answer

A tariff is a fixed charge per unit of imported goods, while a quota is a percentage of the value of imported goods.

Answer

A quota is a fixed charge per unit of imported goods, while a tariff is a percentage of the value of imported goods.

Question 40

What is the purpose of a free trade agreement?

Accepted Answer

To REDUCE or eliminate trade barriers between participating countries

Answer

To increase trade barriers between participating countries

Answer

To set uniform prices for goods and services across participating countries

Answer

To restrict trade with non-participating countries

Question 41

What is the term for the exchange rate at which one currency is valued EXACTLY the same as another currency?

Accepted Answer

Parity

Answer

Equilibrium

Answer

Floatation

Answer

Peg

Question 42

Which of the following is NOT a function of the International Monetary Fund (IMF)?

Accepted Answer

To set interest rates

Answer

To provide financial assistance to countries experiencing balance of payments problems

Answer

To promote economic growth and stability

Answer

To regulate the global financial system

Question 43

What is a primary benefit of international trade?

Accepted Answer

Availability of a more diverse selection of goods and services

Answer

Greater rivalry among homegrown organizations

Answer

Fewer job opportunities in export sectors

Answer

Tighter government oversight of enterprises

Question 44

What is the World Trade Organization's (WTO) mission?

Accepted Answer

To support free trade and reduce trade barriers

Answer

To manage international banking and financial activities

Answer

To give developing nations humanitarian support

Answer

To maintain global peace and stability

Question 45

What is the difference between a tariff and a quota?

Accepted Answer

A tariff is an import tax, whereas a quota restricts the quantity of imported goods.

Answer

A quota is an import tax, whereas a tariff restricts the quantity of imported goods.

Answer

Tariffs and quotas are equivalent types of trade obstacles.

Answer

A tariff helps domestic producers, while a quota helps foreign producers.

Question 46

What is the purpose of the International Monetary Fund (IMF)?

Accepted Answer

To lend money to nations experiencing financial difficulties

Answer

To govern international trade

Answer

To promote economic development in emerging economies

Answer

To resolve international disputes