A level International Trade Quiz 1

16 Questions

Quiz Description

In this quiz, we will be looking at international trade. Here, we will be looking at some concepts such as the determinants of trade, the effects of international trade on national income, the benefits of international trade, and so on. This quiz has all that covered.

International trade is defined as the exchange of goods, services, and capital across international borders since there is a want of goods and services. This trade is very important because it gives consumers the opportunity to be exposed to goods and services not available in their respective countries. Some terms commonly heard as far as international trade is concerned are imports and exports. Exports refer to products that are being sold to the international market, and imports are goods bought from the international market. If a country cannot produce a good efficiently, it can obtain it by trading with another country that can. This is thus known as specialization in international trade.

Having gone through the recap of what international trade is all about, let’s try to apply what we have learned. Answer the following questions in this economics quiz and see how much you know, or need to know. Good luck. 

1:

 Transportation cost of trade affects: 


Correct
  • 1:
    pattern of trade
  • 2:
    boundaries between tradable and non-tradable goods
  • 3:
    Global supply chains
  • 4:
    all of the above
2:

 Underlying the application of the monopolistic competition model to trade is the idea that trade: 


Correct
  • 1:
    increases market size
  • 2:
    allows companies to charge higher price
  • 3:
    increases consumer choices
  • 4:
    decreases the number of firms in an industry
3:

 A no-trade world will have which of the following characteristics: 


Correct
  • 1:
    Countries will have same relative endowments of production factors
  • 2:
    Consumers across countries will have identical and homogenous tastes
  • 3:
    There will be no distortions or externalities
  • 4:
    all of the above
4:

 Which of the following trade policies limits specified quantity of goods to be imported at one tariff rate. 


Correct
  • 1:
    Quota
  • 2:
    Import tariff
  • 3:
    Specific tariff
  • 4:
    All of the above
5:

 In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in 


Correct
  • 1:
    Military capabilities
  • 2:
    labour productivities
  • 3:
    relative availabilities of factors of production
  • 4:
    tastes
6:

 Since 1980s which of the following changes has happened in the world trade? 


Correct
  • 1:
    Share of "north-north" trade has decreased in total merchandise exports
  • 2:
    Share of "south--south" trade has increased in total merchandise exports
  • 3:
    share of agriculture produce has decreased in total merchandise exports
  • 4:
    all of the above
7:

 According to Ricardo, a country will have a comparative advantage in: 


Correct
  • 1:
    Industries in which there are neither imports nor exports
  • 2:
    import competiting industries
  • 3:
    Industries that sell to domestic and foreign buyers
  • 4:
    industries that sell to only foreign buyers
8:

 Nations conduct international trade because:


Correct
  • 1:
    Some nations prefer to produce one thing while others produce other things
  • 2:
    Resources are not equally distributed among all trading nations.
  • 3:
    Trade enhances opportunities to accumulate profits.
  • 4:
    Interest rates are not identical in all trading nations
9:

 

Which of the following is a determinant of trade?


Correct
  • 1:
    Tastes
  • 2:
    Per capita income
  • 3:
    Technological change
  • 4:
    All of the above
10:

 International Trade is most likely to generate short-term unemployment in: 


Correct
  • 1:
    Industries in which there are neither imports nor exports
  • 2:
    Import-competing industries
  • 3:
    Industries that sell to domestic and foreign buyers.
  • 4:
    Industries that sell to only foreign buyers
11:

 The reason why international trade has strong effects on the distribution of income is because:


Correct
  • 1:
    Resources cannot move immediately or without cost from one industry to another.
  • 2:
    Industries differ in the factors of production they demand
  • 3:
    both a & b
  • 4:
    Trade has no effect on distribution of income.
12:

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


Correct
  • 1:
    High wage levels for all domestic workers
  • 2:
    Lower domestic prices
  • 3:
    Development of more efficient methods and new products.
  • 4:
    A greater range of consumption choices.
13:

 Bangladish is relatively abundant in labour, while Canada is relatively abundant in capital. In both countries the production of shirts is relatively more labour intensive than the production of computers. According to the factor endowment theory, Bangladish will have a(n) 


Correct
  • 1:
    Absolut advantage in production of shirts and computers
  • 2:
    Absolute advantage in prodcution of computers
  • 3:
    Comparative advantage in production of shirts.
  • 4:
    Comparative advantage in production of computers.
14:

 A country's workers union attempted to win the approval of legislation that would moderate the practice of foreign sourcing on the part of auto manufacturers. Which of the following best represents this legislation. 


Correct
  • 1:
    Voluntary export quotas
  • 2:
    export subsidies
  • 3:
    tariff quotas
  • 4:
    local content requirement
15:

 Which of the following explains intra-industry trade. 


Correct
  • 1:
    Wrong industrial classification
  • 2:
    Product differentiation
  • 3:
    Economics of scale
  • 4:
    All of the above
16:

 Free traders maintain that an open economy is advantageous in that it provides all of the following except: 


Correct
  • 1:
    Relatively high wage levels for all domestic workers.
  • 2:
    A wider selection of products for consumers
  • 3:
    The utilization of the most efficient production methods.
  • 4:
    Increased competition for world producers

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A level International Trade Quiz 1
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