Units 4.1-4.6: Multiple choice quiz

Units 4.1-4.6: Multiple choice questions


1. Which of the following is considered an advantage of international trade?



2. What is comparative advantage?


3. What is absolute advantage?


4. Country A has a maximum productive capacity of either 50 million tonnes of sugar or 40 million tonnes of tea.  Country B can produce a maximum of 100 million tonnes of sugar and 50 million tonnes of tea.  What is the opportunity cost for each nation of producing 1 unit of tea?


5. Which of the following statements is true about the following countries, A and B?


6. Which of the following is a weakness of comparative advantage theory?


7. A country joins a new bilateral trade agreement and is forced to purchase their raw materials from a country inside the trading bloc rather than from a third country outside of the bloc.  This is known as:


8. A group of countries join together to form an association which grants free trade between members, common external tariff barriers as well as a single currency.  This is called a:


9. Which of the following is an advantage of a fixed exchange rate system?


10. An advantage of a floating exchange rate system is the following:


11. A country places a fixed limit on the number of goods and services that are allowed into a country.  This is an example of which kind of import barrier?


12. The following shows the market for steel into EU, after the imposition of a tariff on imported steel.  Which area represents the welfare loss and loss of consumer surplus from the imposition of the tariff.





13. The following table represents the market for corn in the EU after the imposition of a quota on imported corn.  Total sales of corn after the quota has been introduced are _____





14. Which of the following represents a long term solution for a country wishing to reduce a persistent current account deficit?



15. According to the Marshall-Lerner condition which of the following statements is true.



16. What is the J curve?



17. Which of the following will cause a worsening in a nation's terms of trade?


18. An improvement in the terms of trade of a country is more likely to be beneficial providing:


19. In terms of integration level, from lowest to highest the order of trading blocs is as follows:


20. Which of the following is not a disadvantage of joining a Monetary Union?


Total Score:

Available as a PDF file at: International trade quiz

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