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International Trade and Economic Geography

Description: This quiz covers the concepts of international trade and economic geography, including the theories of comparative advantage, free trade, and protectionism, as well as the factors that influence trade patterns and the location of economic activity.
Number of Questions: 14
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Tags: international trade economic geography comparative advantage free trade protectionism
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Which theory suggests that countries should specialize in producing and exporting goods for which they have a comparative advantage?

  1. Absolute Advantage Theory

  2. Comparative Advantage Theory

  3. Mercantilism

  4. Protectionism


Correct Option: B
Explanation:

The Comparative Advantage Theory, proposed by David Ricardo, argues that countries should focus on producing and exporting goods for which they have a lower opportunity cost, even if they have an absolute advantage in producing other goods.

What is the main argument in favor of free trade?

  1. It promotes economic growth and efficiency.

  2. It protects domestic industries from foreign competition.

  3. It reduces the cost of living for consumers.

  4. It increases government revenue through tariffs.


Correct Option: A
Explanation:

Free trade allows countries to specialize in producing goods and services for which they have a comparative advantage, leading to increased efficiency and economic growth.

Which policy aims to protect domestic industries from foreign competition by imposing tariffs or other trade barriers?

  1. Free Trade

  2. Protectionism

  3. Comparative Advantage

  4. Mercantilism


Correct Option: B
Explanation:

Protectionism is a policy that restricts international trade by imposing tariffs, quotas, or other barriers to protect domestic industries from foreign competition.

What is the term for the movement of goods and services across national borders?

  1. International Trade

  2. Domestic Trade

  3. Foreign Direct Investment

  4. Economic Integration


Correct Option: A
Explanation:

International trade refers to the exchange of goods and services between countries.

Which factor is NOT considered a determinant of a country's comparative advantage?

  1. Natural Resources

  2. Labor Costs

  3. Technological Advancement

  4. Government Policies


Correct Option: D
Explanation:

Government policies, such as tariffs and subsidies, can influence trade patterns but are not considered a determinant of a country's comparative advantage.

What is the term for the movement of capital from one country to another?

  1. International Trade

  2. Foreign Direct Investment

  3. Economic Integration

  4. Protectionism


Correct Option: B
Explanation:

Foreign Direct Investment (FDI) refers to the investment of capital by a company in a foreign country.

Which theory suggests that countries should focus on producing and exporting goods for which they have an absolute advantage?

  1. Absolute Advantage Theory

  2. Comparative Advantage Theory

  3. Mercantilism

  4. Protectionism


Correct Option: A
Explanation:

The Absolute Advantage Theory, proposed by Adam Smith, argues that countries should specialize in producing and exporting goods for which they have an absolute advantage in terms of efficiency.

What is the term for the process of reducing or eliminating trade barriers between countries?

  1. Free Trade

  2. Protectionism

  3. Economic Integration

  4. Mercantilism


Correct Option: C
Explanation:

Economic integration refers to the process of reducing or eliminating trade barriers between countries, leading to increased trade and economic cooperation.

Which factor is considered a determinant of a country's comparative advantage in the Heckscher-Ohlin model?

  1. Natural Resources

  2. Labor Costs

  3. Technological Advancement

  4. Government Policies


Correct Option: A
Explanation:

In the Heckscher-Ohlin model, natural resources are considered a determinant of a country's comparative advantage.

What is the term for the movement of labor from one country to another?

  1. International Trade

  2. Foreign Direct Investment

  3. Economic Integration

  4. Labor Migration


Correct Option: D
Explanation:

Labor Migration refers to the movement of labor from one country to another.

Which theory suggests that countries should focus on producing and exporting goods for which they have a revealed comparative advantage?

  1. Absolute Advantage Theory

  2. Comparative Advantage Theory

  3. Revealed Comparative Advantage Theory

  4. Protectionism


Correct Option: C
Explanation:

The Revealed Comparative Advantage Theory, proposed by Paul Krugman, suggests that countries should focus on producing and exporting goods for which they have a revealed comparative advantage, based on their actual trade patterns.

What is the term for the process of forming a single market among countries, involving the free movement of goods, services, capital, and labor?

  1. Free Trade

  2. Protectionism

  3. Economic Integration

  4. Mercantilism


Correct Option: C
Explanation:

Economic integration refers to the process of forming a single market among countries, involving the free movement of goods, services, capital, and labor.

Which factor is considered a determinant of a country's comparative advantage in the Ricardian model?

  1. Natural Resources

  2. Labor Costs

  3. Technological Advancement

  4. Government Policies


Correct Option: B
Explanation:

In the Ricardian model, labor costs are considered a determinant of a country's comparative advantage.

What is the term for the theory that argues that countries should focus on producing and exporting goods for which they have a dynamic comparative advantage?

  1. Absolute Advantage Theory

  2. Comparative Advantage Theory

  3. Revealed Comparative Advantage Theory

  4. Dynamic Comparative Advantage Theory


Correct Option: D
Explanation:

The Dynamic Comparative Advantage Theory suggests that countries should focus on producing and exporting goods for which they can develop a dynamic comparative advantage through investment in research and development.

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