International Trade and Factor Mobility Quiz

What is the primary focus of factor mobility?

• Movement of capital, technology, and people

• Government policies

• Trade surplus

• Exporting goods

Which theory suggests that a country's wealth is measured by its gold holdings?

• Absolute advantage

• Mercantilism

• Neomercantilism

• Comparative advantage

What does a favorable balance of trade indicate?

• Exporting more than importing

• Importing more than exporting

• High unemployment

• Equal trade

According to Adam Smith, what should a country's well-being be based on?

• Access to goods and services

• Ownership of gold

• Natural resources

• Trade surplus

What does the theory of comparative advantage emphasize?

• Absolute efficiency

• Government intervention

• Trade deficits

• Specialization in production

Which of the following is NOT an assumption of absolute and comparative advantage?

• Fully employed resources

• Economic efficiency

• Transport costs

• Government subsidies

What does the factor proportions theory suggest about trade advantages?

• Dependence on scarce resources

• Abundance of production factors

• Government intervention

• Trade deficits

What is the first stage of the international product life cycle (PLC) theory?

• Decline

• Growth

• Maturity

• Introduction

In which stage of the PLC does a country start selling in foreign markets?

• Introduction

• Decline

• Growth

• Maturity

What is a characteristic of the maturity stage in the PLC?

• Increased exports

• Innovation

• High competition

• Decline in exports