Quiz: Test Your Knowledge Of International Trade Terms!

1. What does GATT stand for in the context of international trade?

General Agreement on Tariffs and Trade

Global Association of Trade and Treaties

Group of All Trade Transactions

General Agreement on Trade and Taxes

GATT aimed to promote international trade by reducing trade barriers and establishing rules for trade.

Explanation

GATT aimed to promote international trade by reducing trade barriers and establishing rules for trade.

2. Which agreement promotes free trade by reducing tariffs and trade barriers?

NAFTA

The General Agreement on Tariffs and Trade (GATT)

OPEC (Oil Producing Exporting Countries)

EU (European Union)

The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.

Explanation

The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.

3. What does FOB stand for in international trade?

Free on Board

Freight on Board

Forward on Board

Free of Brokerage

FOB indicates that the seller is responsible for the cost and risk of the goods until they are loaded on the vessel.

Explanation

FOB indicates that the seller is responsible for the cost and risk of the goods until they are loaded on the vessel.

4. What is the exchange of goods and services between countries without using currency?

Barter trade

Countertrade

Bilateral trade

Foreign exchange

In barter trade, goods and services are exchanged directly without involving currency.

Explanation

In barter trade, goods and services are exchanged directly without involving currency.

5. Which trade term indicates that the seller is responsible for all costs and risks until the goods reach the buyer's location?

EXW (Ex Works)

CIF (Cost, Insurance, Freight)

Delivered-at-place (DAP)

FCA (Free Carrier)

Delivered-at-place (DAP) refers to an arrangement wherein the seller covers the costs and takes on the risks of moving product to the buyer's location.

Explanation

Delivered-at-place (DAP) refers to an arrangement wherein the seller covers the costs and takes on the risks of moving product to the buyer's location.

6. What is the term for a tax imposed on imported goods?

Import duty

Import tariff

Export tax

Import quota

Tariffs are taxes on imports to protect domestic industries and raise revenue for the government.

Explanation

Tariffs are taxes on imports to protect domestic industries and raise revenue for the government.

7. The trade term "INCOTERMS" is associated with which aspect of international trade?

Customs valuation

Contract enforcement

Terms of delivery

Payment methods

INCOTERMS define the responsibilities and obligations of buyers and sellers regarding the delivery of goods.

Explanation

INCOTERMS define the responsibilities and obligations of buyers and sellers regarding the delivery of goods.

8. What term describes a situation where a country can produce a good more efficiently and at a lower cost?

Absolute advantage

Comparative advantage

Balance of trade

Terms of trade

Absolute advantage describes a situation where a country can produce a good more efficiently and at a lower cost than another country. This concept, introduced by Adam Smith, refers to the superior production capability of a country in terms of using fewer resources to produce a particular good.

Explanation

Absolute advantage describes a situation where a country can produce a good more efficiently and at a lower cost than another country. This concept, introduced by Adam Smith, refers to the superior production capability of a country in terms of using fewer resources to produce a particular good.

9. What term refers to the minimum price set by the government for certain imported goods?

Quota

Subsidy

Price controls

Trade surplus

A price controls is a minimum price set by the government to support the domestic market and producers.

Explanation

A price controls is a minimum price set by the government to support the domestic market and producers.

10. Which term refers to the total value of a country's exports minus imports?

Trade surplus

Balance of trade

Net exports

Trade barrier

Net exports represent the value of goods or services exported minus those imported by a country during a specific period.

Explanation

Net exports represent the value of goods or services exported minus those imported by a country during a specific period.

11. The document that provides detailed information about a shipment is called:

An air waybill (AWB)

Certificate of origin (CO)

Proforma invoice (PI)

Shipping manifest

An air waybill (AWB) is a document that accompanies goods shipped by an international air courier to provide detailed information about the shipment and allow it to be tracked.

Explanation

An air waybill (AWB) is a document that accompanies goods shipped by an international air courier to provide detailed information about the shipment and allow it to be tracked.

12. The WTO dispute settlement system can authorize the use of retaliatory measures, also known as:

Trade sanctions

Trade remedies

Trade embargoes

Trade barriers

Trade sanctions can be authorized as retaliation against non-compliance with trade agreements.

Explanation

Trade sanctions can be authorized as retaliation against non-compliance with trade agreements.

13. What is a trade arrangement where a company allows another company to use its intellectual property in exchange for a fee?

Licensing

Franchising

Outsourcing

Countertrade

A licensing agreement allows one party (the licensee) to use and/or earn revenue from the property of the owner (the licensor). Licensing agreements generate revenues, called royalties, earned by a company for allowing its copyrighted or patented material to be used by another company.

Explanation

A licensing agreement allows one party (the licensee) to use and/or earn revenue from the property of the owner (the licensor). Licensing agreements generate revenues, called royalties, earned by a company for allowing its copyrighted or patented material to be used by another company.

14. Which term describes a tax or duty imposed on exports by the exporting country?

Export duty

Export tariff

Import tax

Import duty

Export duty is a tax or duty imposed on goods leaving a country and is paid by the exporter.

Explanation

Export duty is a tax or duty imposed on goods leaving a country and is paid by the exporter.

15. In international trade, what is a voluntary export restriction imposed by the exporting country?

Trade embargo

Trade subsidy

Countervailing duty

Export quota

A trade subsidy is a financial assistance given to exporters to make their products more competitive.

Explanation

A trade subsidy is a financial assistance given to exporters to make their products more competitive.