International Trade

Which of the following is an example of a tariff?

• A ban on the import of goods from a particular country

• A tax imposed on imported goods

• A subsidy for domestic businesses

• A restriction on foreign currency exchange

Answer explanation

A tariff is specifically a tax imposed on imported goods, making the correct choice "A tax imposed on imported goods." The other options describe different trade restrictions or supports, not tariffs.

The ability of a country to produce goods at a lower opportunity cost than another country is called

• Comparative advantage

• Absolute advantage

Answer explanation

The ability of a country to produce goods at a lower opportunity cost than another country is known as comparative advantage. This concept highlights how countries can benefit from trade by specializing in goods they produce more efficiently.

The producer that can produce the most output OR requires the least amount of inputs (resources)

• Comparative Advantage

• Trade Offs

• Absolute Advantage

• Opportunity Cost

Answer explanation

Absolute Advantage refers to the ability of a producer to produce more output or use fewer resources than others. This makes it the correct choice for identifying the most efficient producer.

The following are valid reasons for state's interference in international trade except

• A. protection of national prestige

• B. protection of domestic industries

• C. infant-industry argument

• D. revenues

Answer explanation

The correct choice is A. Protection of national prestige is not a valid reason for state interference in trade, unlike the other options which focus on economic and industrial protection.

In which type of trade policy does a country attempt to limit imports and encourage exports?

• Protectionism

• Free trade

• Trade liberalization

• Export-led growth

Answer explanation

Protectionism is a trade policy where a country limits imports and promotes exports to protect domestic industries. This approach contrasts with free trade and trade liberalization, which encourage open markets.

Which of the following is a possible consequence of imposing high tariffs on imported goods?

• Increased domestic competition

• Lower prices for domestic consumers

• Higher prices for imported goods

• Increased foreign investment

Answer explanation

Imposing high tariffs on imported goods raises their costs, leading to higher prices for consumers. This is a direct consequence of tariffs, making 'Higher prices for imported goods' the correct choice.

International trade allows consumers to benefit from:

• Higher prices for imported goods

• A wider variety of goods and services at lower prices

• Limited access to foreign goods

• Reduced competition in domestic markets

Answer explanation

International trade increases competition and allows consumers to access a wider variety of goods and services at lower prices, benefiting from global markets rather than being limited to domestic options.