International Trade

The reasons that governments intervene in trade do not include:

• Political motives

• Social motives

• Economic motives

• Cultural motives

The economic and strategic advantage gained by being the first company to enter an industry
is called ......... advantage

Which theory explains countries producing goods that require abundant resources and importing goods that require resources in short supply?

• New trade theory

• International product life cycle

• Mercantilism

• Factor proportions theory

A nation’s competitiveness in an industry (and, therefore, trade flows)
depends on the _______ of the industry to innovate and upgrade.

Which of the following is NOT a characteristic of countries implementing mercantilism?

• Maintaining a trade surplus and avoiding trade deficit at all costs

• Actively intervene in international trade to maintain a trade surplus

• Encouraging imports and discouraging exports

• Acquire less-developed territories around the world

How many methods do the governments use to promote trade?

• 4

• 5

• 6

• 7

What is a characteristic of countries following the international product life cycle theory?

• They focus on maintaining a trade surplus

• They encourage imports over exports

• They invest heavily in research and development

• They have a protectionist trade policy

A trade agreement between Canada, Mexico and the US

• NAFTA

• EU

• WTO

• ABC

If the country of Columbia has an optimal climate, low labor costs and the reputation for the world's best tasting coffee, it has a ______ advantage in coffee production.

Which of the following is NOT an argument for free trade?

• increase competition

• allow domestic goods to be sold worldwide

• allow countries to specialize through comparative advantage

• imposing subsidies to protect domestic interest