International Trade Quiz

What does international trade refer to?

• Exchange of money only

• Exchange of services only

• Exchange of goods and services across borders

• Exchange of goods within a country

Who introduced the concept of absolute advantage?

• David Ricardo

• John Maynard Keynes

• Adam Smith

• Milton Friedman

What is comparative advantage based on?

• Total production capacity

• Opportunity cost

• Market demand

• Government regulations

What is one advantage of international trade?

• Decreased variety of goods

• Less efficiency

• Higher income and economic growth

• Increased transportation costs

What is protectionism?

• Promoting international cooperation

• Reducing tariffs

• Barriers to free flow of goods

• Encouraging free trade

What is a tariff?

• A type of trade agreement

• A limit on imports

• A tax on imported goods

• A ban on trade

What does a quota do?

• Lowers the price of exports

• Increases the price of imports

• Limits the number of imports

• Encourages more imports

What is one disadvantage of international trade?

• Increased job opportunities

• Depletion of country’s reserves

• Higher efficiency

• More varieties of goods

What should a country do if it has a comparative advantage?

• Stop trading

• Specialize in producing that good

• Produce everything equally

• Import all goods

What is an embargo?

• A type of trade agreement

• A law that bars trade with another country

• A limit on imports

• A tax on imports