International Trade Mock Test Quiz: Trivia!

10 Questions | Total Attempts: 721

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International Trade Mock Test Quiz: Trivia!

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Questions and Answers
  • 1. 
    Autarky implies that
    • A. 

      A country’s consumption possibilities are the same as its production possibilities

    • B. 

      Equilibrium has been reached with the maximum gains from specialization and trade

    • C. 

      Equilibrium has been reached with the maximum amount of international trade

    • D. 

      The nation has such a high standard of living that there are technically no poor people

  • 2. 
    The terms of trade are?
    • A. 

      the countries’ production possibilities curve

    • B. 

      The autarky equilibrium

    • C. 

      He length of time two individuals or countries have been trading

    • D. 

      The exchange rates of two goods

  • 3. 
    A nation’s consumption possibilities frontier is?
    • A. 

      The same as its production possibilities frontier only if there is no international trade

    • B. 

      Never the same as its production possibilities frontier

    • C. 

      The same as its production possibilities frontier only if there is advantageous trade

    • D. 

      Always the same as its production possibilities frontier

  • 4. 
    The gains from trade are due primarily to the fact that?
    • A. 

      The wealth of large, industrialized nations can be spread throughout the world

    • B. 

      Total world output increases when each country specializes

    • C. 

      Countries can boost their economies by increasing exports

    • D. 

      All the above

  • 5. 
    The source of gains from trade is?
    • A. 

      Tariffs

    • B. 

      Self-sufficiency

    • C. 

      Autarky equilibrium

    • D. 

      Comparative advantage

  • 6. 
    Mutually beneficial trade cannot occur
    • A. 

      When each country has its own comparative advantage

    • B. 

      If one country has absolute advantages in the production of every good

    • C. 

      When the opportunity costs of producing each good are equal for both trading partners

    • D. 

      If total world production equals total world consumption

  • 7. 
    To maximize worldwide gains from trade, the country which should produce a good is the country that
    • A. 

      Has the lowest opportunity cost of producing that good

    • B. 

      Can produce that good using the fewest resources

    • C. 

      Will produce that good using the most expensive resources

    • D. 

      None of these

  • 8. 
    Comparative advantage
    • A. 

      Exists only when one producer can make the product using fewer resources than any other producer

    • B. 

      Leads to the most efficient allocation of resources and the greatest combined output

    • C. 

      Eliminates specialization, so that each country produces all of its own needs independently

    • D. 

      All the above are correct

  • 9. 
    Which of the following is not an economic reason for international specialization?
    • A. 

      Some countries have educated, trained workers, which other countries have unskilled workers

    • B. 

      Tastes and preferences tend to be different in different countries

    • C. 

      The world price of a good is determined by the world supply and demand for the product

    • D. 

      There is no reason for specialization

  • 10. 
    When the world price of an internationally traded product is greater than a country’s domestic equilibrium price.
    • A. 

      The domestic price will prevail, and the world price is irrelevant

    • B. 

      The country’s import line is horizontal

    • C. 

      The country’s exports of the product will increase

    • D. 

      Can not be determined

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