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International Trade and Development Economics

Description: This quiz covers the fundamental concepts, theories, and practices related to International Trade and Development Economics.
Number of Questions: 15
Created by:
Tags: international trade development economics comparative advantage economic growth trade policies
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According to the theory of comparative advantage, countries should specialize in producing and exporting goods for which they have a(n):

  1. Absolute advantage

  2. Comparative advantage

  3. Opportunity cost

  4. Marginal cost

Show answer
Correct Option: B
Explanation:

The theory of comparative advantage suggests that countries should focus on producing and exporting goods for which they have a relatively lower opportunity cost compared to other countries.

Which of the following is NOT a determinant of a country's comparative advantage?

  1. Natural resources

  2. Labor costs

  3. Technological advancement

  4. Government policies

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Correct Option: D
Explanation:

Government policies can influence a country's trade patterns, but they are not a determinant of comparative advantage, which is based on underlying economic factors.

The concept of economic growth in development economics primarily focuses on:

  1. Increasing per capita income

  2. Reducing poverty and inequality

  3. Improving human capital

  4. All of the above

Show answer
Correct Option: D
Explanation:

Economic growth in development economics encompasses increasing per capita income, reducing poverty and inequality, and improving human capital.

Which of the following is NOT a common trade policy instrument used by governments?

  1. Tariffs

  2. Subsidies

  3. Quotas

  4. Embargoes

Show answer
Correct Option: D
Explanation:

Embargoes are more commonly associated with political and economic sanctions rather than general trade policy instruments.

The concept of infant industry protection in trade policy aims to:

  1. Shield domestic industries from foreign competition

  2. Promote export-oriented industries

  3. Attract foreign investment

  4. Reduce trade barriers

Show answer
Correct Option: A
Explanation:

Infant industry protection is a temporary measure to protect domestic industries from foreign competition, allowing them to mature and become competitive in the global market.

The World Trade Organization (WTO) is responsible for:

  1. Enforcing trade agreements

  2. Resolving trade disputes

  3. Promoting free trade

  4. All of the above

Show answer
Correct Option: D
Explanation:

The WTO's primary functions include enforcing trade agreements, resolving trade disputes, and promoting free trade among its member countries.

The concept of economic interdependence in international trade refers to:

  1. The mutual reliance of countries on each other for goods and services

  2. The specialization of countries in producing different goods and services

  3. The exchange of goods and services between countries

  4. The flow of capital and labor between countries

Show answer
Correct Option: A
Explanation:

Economic interdependence in international trade highlights the interconnectedness of countries through trade, where they rely on each other for the supply and demand of goods and services.

The term 'balance of payments' in international economics refers to:

  1. The difference between a country's exports and imports

  2. The flow of money between countries

  3. The value of a country's currency relative to other currencies

  4. The level of a country's foreign exchange reserves

Show answer
Correct Option: A
Explanation:

The balance of payments records the difference between a country's exports and imports, as well as other financial transactions with the rest of the world.

Which of the following is NOT a common measure of economic development?

  1. Gross domestic product (GDP)

  2. Human Development Index (HDI)

  3. Gini coefficient

  4. Purchasing power parity (PPP)

Show answer
Correct Option: D
Explanation:

Purchasing power parity is a measure of the relative value of currencies, not a direct measure of economic development.

The concept of 'terms of trade' in international economics refers to:

  1. The ratio of a country's export prices to its import prices

  2. The difference between a country's exports and imports

  3. The value of a country's currency relative to other currencies

  4. The level of a country's foreign exchange reserves

Show answer
Correct Option: A
Explanation:

The terms of trade measure the relative prices of a country's exports and imports, indicating whether a country is gaining or losing in its international trade.

The concept of 'Dutch disease' in development economics refers to:

  1. The negative impact of a natural resource boom on other sectors of the economy

  2. The positive impact of a natural resource boom on economic growth

  3. The transfer of wealth from developed countries to developing countries

  4. The flow of capital from developing countries to developed countries

Show answer
Correct Option: A
Explanation:

Dutch disease refers to the negative consequences of a sudden increase in the exploitation of natural resources, leading to a decline in other sectors of the economy.

The concept of 'brain drain' in development economics refers to:

  1. The migration of skilled workers from developing countries to developed countries

  2. The migration of skilled workers from developed countries to developing countries

  3. The transfer of technology from developed countries to developing countries

  4. The flow of capital from developing countries to developed countries

Show answer
Correct Option: A
Explanation:

Brain drain refers to the migration of skilled workers from developing countries to developed countries, leading to a loss of human capital in the developing countries.

The concept of 'fair trade' in international economics refers to:

  1. Ensuring that producers in developing countries receive a fair price for their products

  2. Promoting free trade between countries

  3. Reducing trade barriers between countries

  4. Enforcing trade agreements between countries

Show answer
Correct Option: A
Explanation:

Fair trade aims to ensure that producers in developing countries receive a fair price for their products, promoting ethical and sustainable trade practices.

The concept of 'sustainable development' in development economics refers to:

  1. Economic growth that does not harm the environment

  2. Economic growth that benefits all members of society

  3. Economic growth that is maintained over a long period of time

  4. All of the above

Show answer
Correct Option: D
Explanation:

Sustainable development encompasses economic growth that does not harm the environment, benefits all members of society, and can be maintained over a long period of time.

The concept of 'globalization' in international economics refers to:

  1. The increasing interconnectedness of countries through trade, investment, and technology

  2. The spread of Western culture and values around the world

  3. The decline of national borders and the rise of a global economy

  4. All of the above

Show answer
Correct Option: D
Explanation:

Globalization encompasses the increasing interconnectedness of countries through trade, investment, technology, and the spread of ideas and culture.

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