Understanding Global Trade Dynamics

What is the primary purpose of international trade?

• To establish political alliances between nations.

• To exchange goods and services between countries.

• To promote cultural exchange among countries.

• To increase tariffs on imported goods.

Name one advantage of free trade agreements.

• Increased unemployment rates

• Reduced market access for exporters

• Higher tariffs on imports

• Increased economic growth

What does the term 'trade balance' refer to?

• The number of trade agreements a country has.

• The amount of foreign investment in a country.

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

• The total value of a country's currency.

How do tariffs affect international trade?

• Tariffs increase international trade by lowering the cost of imports.

• Tariffs reduce international trade by increasing the cost of imports, leading to decreased demand and potential trade disputes.

• Tariffs promote free trade by eliminating barriers.

• Tariffs have no impact on international trade dynamics.

What is the role of the World Trade Organization (WTO)?

• To regulate domestic markets in member countries.

• To set global environmental standards.

• To provide loans to developing countries.

• The WTO's role is to promote and regulate international trade.

Define the term 'comparative advantage' in trade.

• Comparative advantage refers to the total production capacity of a country in trade.

• Comparative advantage is the ability to produce a good at a higher opportunity cost than another producer.

• Comparative advantage is the ability to trade goods without any cost involved.

• Comparative advantage is the ability to produce a good at a lower opportunity cost than another producer.

What are non-tariff barriers to trade?

• Taxes imposed on imported goods

• Subsidies provided to domestic industries

• Non-tariff barriers to trade are restrictions other than tariffs that countries impose to control the amount of trade.

• Trade agreements between countries

How can currency exchange rates impact international trade?

• Currency exchange rates have no effect on trade balances.

• Currency exchange rates can significantly impact international trade by affecting the prices of exports and imports.

• Higher exchange rates always benefit exporters.

• Exchange rates only influence domestic markets, not international trade.

What is the significance of trade blocs like the EU or NAFTA?

• Trade blocs isolate member countries from global markets.

• Trade blocs primarily focus on military alliances.

• Trade blocs enhance economic cooperation, reduce trade barriers, and promote stability among member countries.

• Trade blocs increase tariffs on imports.

Explain the concept of globalization in relation to trade.

• Globalization isolates economies by promoting local trade only.

• Globalization enhances international trade by reducing barriers and increasing economic interdependence among countries.

• Globalization decreases competition by limiting market access.

• Globalization has no impact on trade between countries.