International Trade Quiz - Trade Theories

What is the definition of international trade?

• Exchange of goods and services within a single country

• Exchange of goods, services, capital, and ideas across borders

• Trading only between multinational corporations

• Trade restricted by tariffs and quotas

Which of the following is NOT a key component of international trade?

• Physical goods

• Services

• Domestic employment

• Foreign direct investment

Globalization refers to:

• The expansion of domestic markets

• Integration of economies, cultures, technologies, and politics across borders

• A process limited to developed countries

• The reduction of global trade

Which ancient trade route connected China to Europe?

• Indian Ocean Route

• Mediterranean Trade

• The Silk Road

• Transatlantic Trade

What was the primary goal of mercantilism?

• Encouraging free trade

• Accumulating precious metals by maximizing exports and minimizing imports

• Reducing government intervention in trade

• Establishing regional trade agreements

Which of the following is NOT a principle of mercantilism?

• Export promotion

• Import limitation

• Free trade policies

• Wealth accumulation

What was a major impact of the Industrial Revolution on international trade?

• Decrease in global production

• Reduced demand for raw materials

• Increase in mass production and global trade

• Elimination of colonial expansion

According to Adam Smith’s theory of absolute advantage, a country should:

• Produce and export all goods

• Specialize in goods it produces most efficiently

• Reduce trade to protect domestic industries

• Adopt high tariffs on imports

David Ricardo's theory of comparative advantage emphasizes:

• Producing goods where a country has the lowest opportunity cost

• Specializing only in the most advanced technologies

• Reducing imports to boost local industries

• Increasing tariffs on foreign goods

The Heckscher-Ohlin model explains trade based on:

• Absolute advantage

• Factor endowments

• Currency exchange rates

• The size of a country's military