International Trade Concepts Quiz

What concept did Adam Smith introduce regarding international trade?

• Comparative advantage

• Protective tariffs

• Absolute advantage

• Revenue tariffs

What is the modern concept that describes a country's ability to produce products more efficiently and at a lower opportunity cost than other countries?

• Absolute advantage

• Protective tariffs

• Comparative advantage

• Revenue tariffs

Which of the following is NOT listed as an advantage of international trade?

• Greater world output

• Increased political stability

• Faster economic growth

• Displacement of select industries and workers

What are some ways of restricting trade mentioned in the text?

• Enacting protective and revenue tariffs, establishing quotas

• Requiring licenses and citing health concerns

• Placing embargos and requiring inspections

• All of the above

Who are the individuals that want to protect domestic producers against foreign competition?

• Free traders

• Comparative traders

• Protectionists

• Absolute traders

The use of trade barriers only works if:

• Other nations respond with barriers of their own

• Domestic industries are fully self-sufficient

• International trade is unrestricted

• Other nations do not respond with barriers of their own

What is the foreign exchange rate?

• The price of one country's currency in terms of goods and services

• The price of one country's currency in terms of another's

• The interest rate charged for international trade loans

• The tax imposed on foreign goods

What happened to exchange rates after the United States repealed their gold standard?

• Exchange rates became fixed

• Exchange rates were abolished

• Exchange rates moved to flexible rates

• Exchange rates were pegged to the U.S. dollar

What is a trade deficit?

• When a country exports more than it imports

• When a country's import and export values are equal

• When a country imports more than it exports

• When a country stops trading internationally

How does a very strong or very weak dollar affect the U.S. economy?

• A strong dollar benefits both export and import industries

• A weak dollar benefits both export and import industries

• A strong dollar benefits export industries and weakens import industries

• A strong dollar weakens export industries and benefits import industries