international economics_part 1

International trade differs from domestic trade due to

• bigger size of market for international trade

• different units of currency used in international trade

• resources being more mobile domestically than they are internationally

• all of the above

A nation can benefit from international trade if

• it exports its product which has a lower opportunity cost and imports the product that has a higher opportunity cost

• it imposes a quota on imported goods

• it currency appreciates in value

• none of the above

if country A has an absolute advantage over Country B in the production of particular product, it can produce that product

• with lower inputs per unit

• in greater absolute quantities

• with a comparative advantage

• at a lower opportunity cost of production

The theory of specialization and free trade that benefit all trading partners is called a (n)

• comparative advantage

• absolute advantage

• mutual advantage

• none of the above

The comparative advantage theory states that

• benefit can be gained through specialization in the product with highest productivity

• benefits can be gained from importing cheap goods in the international market

• international trade can exist when prices two countries change

• international trade will always benefit two country eqaully

International trade gives advantage to trading countries because it leas to

• greater efficiency

• greater self sufficiency

• diseconomies of scale

• higher product prices

A primary reason why nations conduct international trade is because

• some nations prefer to produce one thing while others produce another

• resources are not equally distributed to all trading nations

• trade enhance opportunities to accumulate profits

• interest rates are not identical in all trading nation

if a nation has an open economy it means that the nation

• allows private ownership of capital

• has flexible exchange rates

• has fixed exchange rates

• conducts trade with other countries