International Economics Quick Quiz 1
Just to check your basic knowledge of international economics :)
Questions and Answers
- 1.
What is the term for the resources naturally held by a nation?
Explanation
Factor endowment refers to the resources that a nation possesses naturally, such as land, labor, capital, and entrepreneurship. These resources are essential for economic production and play a crucial role in determining a country's comparative advantage and its ability to compete in the global market. By understanding their factor endowments, nations can make strategic decisions regarding trade, investment, and economic development.Rate this question:
- 2.
What is the term for the superiority of one nation compared to another in the production of a commodity?
Explanation
Absolute advantage refers to the ability of a nation to produce a commodity more efficiently and with higher productivity compared to another nation. This means that the nation with absolute advantage can produce more of the commodity using the same amount of resources or produce the same amount of the commodity using fewer resources. It is a measure of the overall superiority in production capabilities and efficiency between nations.Rate this question:
- 3.
What is the term for the superiority of one nation compared to another in the production of more than one commodity?
Explanation
Comparative advantage refers to the ability of one nation to produce multiple commodities more efficiently than another nation. It is based on the concept of opportunity cost, where a country focuses on producing goods that it can produce at a lower opportunity cost compared to other nations. This allows for specialization and trade, leading to mutual benefits for both nations involved.Rate this question:
- 4.
What is the term for the value of one currency measured against another?
Explanation
The term for the value of one currency measured against another is called the exchange rate. It represents the rate at which one currency can be exchanged for another. The exchange rate is influenced by various factors such as supply and demand, interest rates, inflation, and economic stability. It plays a crucial role in international trade and finance, as it determines the cost of goods and services when traded between different countries.Rate this question:
- 5.
What is the term for one currency holding the same value as another?
Explanation
Parity refers to the term when one currency holds the same value as another. In other words, it is a situation where two currencies have an equal exchange rate, allowing them to be exchanged without any gain or loss in value. This concept is important in international trade and finance as it facilitates fair and balanced transactions between different currencies.Rate this question:
- 6.
Which of the following are trade blocs?
- A.
ASEAN
- B.
EU
- C.
APEC
- D.
NAFTA
Correct Answer(s)
A. ASEAN
B. EU
D. NAFTAExplanation
ASEAN, EU, and NAFTA are all examples of trade blocs. A trade bloc is a group of countries that have formed an alliance to promote trade and economic cooperation among themselves. ASEAN (Association of Southeast Asian Nations) is a regional organization consisting of ten Southeast Asian countries. EU (European Union) is a political and economic union of 27 European countries. NAFTA (North American Free Trade Agreement) is an agreement between Canada, Mexico, and the United States to eliminate trade barriers and promote economic integration. These trade blocs aim to enhance economic growth, increase trade, and foster closer relationships among member countries.Rate this question:
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- 7.
What is the term for the amount of monies owed by Australians to other nations?
Correct Answer(s)
foreign debtExplanation
Foreign debt refers to the total amount of money that Australians owe to other nations. This includes loans, bonds, and other forms of borrowing from foreign governments, banks, or individuals. It is an indicator of a country's financial obligations and can have significant implications for its economy and creditworthiness.Rate this question:
- 8.
What is the term for the ownership of Australia business interests by people from other nations?
Correct Answer(s)
foreign investmentExplanation
Foreign investment refers to the ownership of Australia business interests by individuals or entities from other nations. It involves the purchase or acquisition of assets, shares, or properties in Australian businesses by foreign individuals, companies, or governments. This can include direct investments in Australian companies, real estate, infrastructure projects, or portfolio investments in stocks and bonds. Foreign investment plays a significant role in the Australian economy, contributing to economic growth, job creation, and technological advancements. It also brings in capital, expertise, and new market opportunities, but it can also raise concerns related to national security, sovereignty, and economic control.Rate this question:
- 9.
What does IIP refer to?
Correct Answer(s)
international investment positionExplanation
IIP refers to international investment position, which is a measure of a country's net international investment position at a given point in time. It takes into account the value of a country's external financial assets and liabilities, including direct investment, portfolio investment, and other investments. The IIP provides valuable information about a country's economic and financial relationship with the rest of the world, and is used by policymakers and analysts to assess a country's vulnerability to external shocks and its ability to meet its external obligations.Rate this question:
- 10.
The 4 components of the Current Account are:
- net goods
- net services
- net income
- net unrequited transfers
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because the four components listed are indeed the components of the Current Account. Net goods refers to the balance of trade in goods, which is the difference between exports and imports. Net services refers to the balance of trade in services, such as tourism, transportation, and financial services. Net income refers to the balance of income from investments, such as dividends and interest payments. Net unrequited transfers refer to one-way transfers of money, such as foreign aid or remittances. These four components together make up the Current Account, which is a measure of a country's international trade and financial transactions.Rate this question:
- 11.
Which of the following are accounts within the Balance of Payments?
- A.
Current account
- B.
Capital account
- C.
Financial account
Correct Answer(s)
A. Current account
B. Capital account
C. Financial accountExplanation
The Balance of Payments is a record of all economic transactions between a country and the rest of the world over a specific period. It consists of three main accounts: the current account, the capital account, and the financial account. The current account includes the balance of trade, net income from abroad, and net transfers. The capital account records the flow of capital between a country and the rest of the world, including investments and loans. The financial account captures changes in ownership of financial assets and liabilities. Therefore, all three options, current account, capital account, and financial account, are accounts within the Balance of Payments.Rate this question:
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