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(8.) Economics Hl. International Economics, Definitions.

37 Questions
Economics Quizzes & Trivia

IB Economics HL. Definitions QUIZ. Section 4. International economics.

Questions and Answers
  • 1. 
    Define "free trade" using three words!
  • 2. 
    The actual number of goods and services in and out of your country is known as a country's ...
    • A. 

      Trade mass

    • B. 

      Trade volumes

    • C. 

      Terms of trade

    • D. 

      Net exports

  • 3. 
    Write down the three letters signifying a multinational corporation (that have production in at least two countries)
  • 4. 
    "(Index of export prices / Index of import prices) * 100 What is being defined?
    • A. 

      Exchange rate

    • B. 

      Trade volumes

    • C. 

      Balance of payments

    • D. 

      Terms of trade

  • 5. 
    A country has [...] in producing a good over another, if it has a lower opportunity cost of producing that good.
  • 6. 
    A country has absolute advantage in producing a good over another if it is able to produce the good using fewer [...]
  • 7. 
    "When a country imposes trade barriers to protect the incomes of domestic producers" What is specifically being defined above?
    • A. 

      Quota

    • B. 

      Embargo

    • C. 

      Subsidy

    • D. 

      Protectionism

  • 8. 
    Define "tariff" using three words!
  • 9. 
    A total ban on trade is known as a(n)
    • A. 

      Subsidy

    • B. 

      Quota

    • C. 

      Embargo

    • D. 

      Tariff

  • 10. 
    A domestic government adjusts exchange rates to obtain unfairly low prices in order to protect domestic producers. This is known as ...
    • A. 

      Voluntary export restraints

    • B. 

      Import licensing

    • C. 

      Administrative barriers

    • D. 

      Exchange controls

  • 11. 
    "A physical limit imposed on the amount of a good/service that may be imported" What is being defined?
  • 12. 
    A government may give producers a payment in order to lower prices for consumers and increase the quantity of domestic goods produced. This payment is known as a ...
  • 13. 
    "An account of a country's transactions with the rest of the world" What, specifically, is being defined?
    • A. 

      Capital account

    • B. 

      Balance of payments

    • C. 

      Current account

  • 14. 
    An area with no protectionism where goods and services move freely between borders can simply be defined as a "free trade area"
    • A. 

      True

    • B. 

      False

  • 15. 
    A free trade area where the countries lack sovereignty (there is a government body over all countries involved) is known as a(n) ...
  • 16. 
    A customs union where the four factors of production can move freely over borders is known as a(n) ...
  • 17. 
    A common market where member countries have common economic policies and either a fixed exchange rate or a common currency is known as a(n)
  • 18. 
    "When a trade agreement leads to production being switched from a low-cost producer to a high-cost producer" What is being defined?
    • A. 

      Trade creation

    • B. 

      Trade diversion

    • C. 

      Protectionism

    • D. 

      Dirty float

  • 19. 
    The opposite of trade diversion - "when a trade agreement leads to production being switched from a high-cost producer to a low-cost producer" is known as ...
  • 20. 
    A country's exchange rate is the rate at which the country's currency trades for another on the ...
  • 21. 
    When the exchange rate is determined solely by market forces (supply and demand), it is said to be ...
  • 22. 
    "Any fall in the value of a domestic currency" What is being defined?
    • A. 

      Devaluation

    • B. 

      Revaluation

    • C. 

      Depreciation

    • D. 

      Appreciation

  • 23. 
    Write down the term signifying the "guessing" of what exchange rates are going to do
  • 24. 
    "When a government buys or sells its own currency (by using gold reserves or foreign currency reserves) in order to stabilize the currency" What is this behavior called?
    • A. 

      Dirty boat

    • B. 

      Dirty float

    • C. 

      Dirty throat

    • D. 

      Kashmir goat

  • 25. 
    PPP (Purchasing power parity) is a theory that argues that the exchange rate will always adjust itself to equal ...
  • 26. 
    Any rise in the value of a domestic currency is known as revaluation
    • A. 

      True

    • B. 

      False

  • 27. 
    A country's external balance is the country's account with the rest of the world and thus simply the country's ...
  • 28. 
    Write down the two letters signifying a concept from macroeconomics, which makes up a country's internal balance and is determined by a five-letter formula
  • 29. 
    "An exchange rate system where a currency is fixed to a certain level, but may be lowered (devalued) or highered (revalued)" What is being defined?
    • A. 

      Floating exchange rate

    • B. 

      Expenditure switching

    • C. 

      Fixed exchange rate

  • 30. 
    As stated before, the "fix" of the fixed exchange rate is changeable. What is then the proper term for this "fix"?
  • 31. 
    [...] is a way of shifting the aggregate demand curve, changing the total amount spent on imports by altering incomes
    • A. 

      Expenditure switching

    • B. 

      Expenditure changing

    • C. 

      Revaluation

    • D. 

      Negative advertising

  • 32. 
    Hence write down the "type of protectionism persuading people to switch their spending between foreign and domestic products by changing relative prices"
  • 33. 
    Any item of economic value owned by a corporation or an individual is known as an ...
  • 34. 
    For a currency depreciation to have a positive impact on a country's balance of payments, the sum of their price elasticities of exports and imports must ...
    • A. 

      Equal 1

    • B. 

      Be less than 1

    • C. 

      Be greater than 1

    • D. 

      Be negligible

  • 35. 
    Write down the name of the condition stated in the last question
  • 36. 
    Payments between countries when no goods or services change hands are known as "net income flows"
    • A. 

      True

    • B. 

      False

  • 37. 
    Net income flows are on the other hand "a measure of the net movement of goods and services moving in and out of a country"
    • A. 

      True

    • B. 

      False