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Quiz No. 5

International Trade

1. It is a policy that can be viewed as a spectrum of policies with the policy of free trade and
protectionism.

a. Open economy c. International trade

b. Domestic trade d. Closed economy

2. Which of the following statements is most likely the reason why a country engage in international
trading?

a. International trade is beneficial to their country.

b. Due to the weakness of a country's economy.

c. Due to the unlimited needs and wants of the people but has a limited resources.

d. A country is engage in trading because they were being left behind by other countries.
3. This is the exchange of capital, goods and services within the country.

a. International trade c. Exporting

b. Domestic trade d. Importing

4. According to this theory for the nation to become rich and powerful, it needs to export more and
import less.

a. Mercantilism (Thomas Munn)

b. Theory of Absolute Advantage (Adam Smith)

c. Theory of Comparative Advantage (David Recardo)

d. Hecksher-Ohlin (HO) Theory

5. He contented that with free trade, each nation could specialize in the production of those
commodities in which it had an Absolute Advantage, import those commodities in which it had Absolute
Disadvantage

a. Thomas Sangster c. David Recardo

b. Adam Smith d. Karl Marx

6. These reasons were imposed by the government to limit the country's trading scheme with others:

i. A country enjoys unemployment and regards import competition as a potential source of that
unemployment.
ii. A country is short of foreign exchange reserves and sees increased import quota as apotential source
of new revenue.

a. True, False c. True, True

b. False, False d. False, True

7. It is a protectionist tariff that a domestic government imposes on foreign imports that it believes are
priced below fair market value.

a. Anti-dumping duty c. Countervailing duty

b. Defense argument d. Infant industry argument

8. Countries specialize and export those goods and services where they have comparative advantage and
import those commodities where they do not have comparative advantage. So what is the basis for
specialization and trade in general?

a. Absolute advantage c. Absolute disadvantage

b. Specialization d. Comparative advantage

9. States that without trade fewer commodities would be available for the domestic market of a country,
and with trade more commodities would be available in the domestic market of a country.

a. The Law of Comparative Advantage

b. Theoretical Bases of International Trade

c. Factor-price Equalization theorem

d. The Principle of Absolute Advantage

10. It is a branch of economics, which together with international finance, forms the larger branch called
.

a. International trade c. International Economics

b. International finance d. International market

11. Services being traded are the following, except:

a. Banking c. Tourism

b. Consulting d. Spare parts

12. When an individual produce only those that they produced well, they reap the benefits of .

a. Absolute advantage. c. Comparative advantage

b. Mercantilism d. Specialization

13. Arguments that are both based on the impositions of tariffs.


a. Defense and Infant industry arguments

b. Promotion of employment and anti-dumping arguments

c. Patriotism and Diversification of industry arguments

14. A country that can produce a product or services at lower opportunity cost than another country is
said to have ____________ over that other country in particular good or service.

a. Specialization c. Comparative advantage

b. Absolute advantage d. Absolute disadvantage

15. It is an argument that through excessive specialization, a country becomes over dependent on other
countries.

a. Diversification of industry argument

b. Patriotism argument

c. Pauper labor argument

d. Anti-dumping argument

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