Chapter: Introduction to International Trade
1.

What are the four factor endowments?

A. national resources, labor, physical capital and human capital
B. types of technology
C. material inputs used up in the process of production
D. international differences in climate
Answer» A. national resources, labor, physical capital and human capital
2.

The Heckscher- Ohlin model is principally focused on what aspect of economics?

A. international trade
B. supply and demand
C. normative economics
D. production possibility frontier
Answer» A. international trade
3.

A no-trade world will have which of the following characteristics:

A. countries will have same relative endowments of production factors
B. consumers across countries will have identical and homogenous tastes
C. there will be no distortions or externalities
D. all of the above
Answer» D. all of the above
4.

Transportation cost of trade affects:

A. pattern of trade
B. boundaries between tradable and non-tradable goods
C. global supply chains
D. all of the above
Answer» D. all of the above
5.

International Trade is most likely to generate short-term unemployment in:

A. industries in which there are neither imports nor exports
B. import-competing industries
C. industries that sell to domestic and foreign buyers.
D. industries that sell to only foreign buyers
Answer» B. import-competing industries
6.

What was the first economic theory of international trade to be developed?

A. the theory of mercantilism
B. the theory of comparative advantage
C. the theory of absolute advantage
D. the heckscher-ohlin theory
Answer» A. the theory of mercantilism
7.

According to Adam Smith, the trade between countries should happen _____.

A. naturally according to the market forces
B. under government regulation
C. using factors that are available
D. only when a country has an absolute advantage
Answer» D. only when a country has an absolute advantage
8.

If a nation has an open economy it means that the nation:

A. allows private ownership of capital.
B. has flexible exchange rates
C. has fixed exchange rates
D. conducts trade with other countries
Answer» D. conducts trade with other countries
9.

International trade forces domestic firms to become more competitive in terms of

A. the introduction of new products
B. product design and quality
C. product price
D. all of the above
Answer» D. all of the above
10.

The movement to free international trade is most likely to generate short-term unemployment in which industries

A. industries in which there are neither imports nor exports
B. import-competing industries.
C. industries that sell to domestic and foreign buyers
D. industries that sell to only foreign buyers
Answer» B. import-competing industries.
11.

According to the principle of comparative advantage:

A. south korea should export steel
B. south korea should export steel and dvds
C. japan should export steel
D. japan should export steel and dvds
Answer» A. south korea should export steel
12.

Country A has an absolute advantage in

A. product x
B. product y
C. neither x nor y
D. both x and y
Answer» B. product y
13.

Globalization refers to:

A. lower incomes worldwide
B. less foreign trade and investment
C. global warming and their effects
D. a more integrated and interdependent world
Answer» D. a more integrated and interdependent world
14.

Comparative Cost Trade Theory is given by

A. adam smith
B. david ricardo
C. gottfried haberle
D. heckscher ohlin
Answer» B. david ricardo
15.

……………...is the payment method most often used in International Trade which offers the exporter best assurance of being paid for the products sold internationally.

A. bill of lading
B. letter of credit
C. open account
D. drafts
Answer» B. letter of credit
16.

Key controllable factors in global marketing are:

A. government policy and legislation
B. social and technical changes
C. marketing activities and plans
D. all of the above.
Answer» C. marketing activities and plans
17.

The first phase of globalization started around 1870 and ended with …..

A. world war i
B. world war ii
C. the establishment of gatt
D. in 1913 when gdp was high
Answer» A. world war i
18.

According to this theory, the holdings of a country’s treasure primarily in the form of gold constituted its wealth.

A. gold theory
B. ricardo theory
C. mercantilism
D. hecksher theory
Answer» C. mercantilism
19.

The Theory of Absolute Cost Advantage is given by

A. david ricardo
B. adam smith
C. f w taylor
D. ohlin and heckscher
Answer» B. adam smith
20.

The Theory of Relative Factor Endowments is given by

A. david ricardo
B. adam smith
C. c. f w taussig
D. ohlin and hecksher
Answer» D. ohlin and hecksher
21.

The theory of comparative cost advantage is given by

A. david ricardo
B. adam smith
C. f w taussig
D. ohlin and heckscher
Answer» A. david ricardo
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