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WorksheetsUnderstanding International Trade
Total questions: 10
Worksheet time: 5mins
What is the principle of comparative advantage?
Individuals or countries should specialize in producing goods with lower opportunity costs.
Individuals should avoid specialization to reduce risk.
Opportunity costs are irrelevant in production decisions.
Countries should produce all goods equally to maximize trade.
How do tariffs affect international trade?
Tariffs only affect domestic production and not international trade.
Tariffs increase international trade by lowering the cost of imports.
Tariffs reduce international trade by increasing the cost of imports, making domestic products more competitive.
Tariffs have no impact on the competitiveness of domestic products.
What are trade deficits and surpluses?
Trade deficits and surpluses refer to the balance of services only, not goods.
Trade deficits are when imports exceed exports; trade surpluses are when exports exceed imports.
Trade deficits are when exports equal imports; surpluses are when imports are less than exports.
Trade deficits occur when exports exceed imports; surpluses occur when imports exceed exports.
Explain the concept of free trade agreements.
Free trade agreements are treaties that reduce or eliminate trade barriers between countries to promote trade.
Free trade agreements impose tariffs on imports.
Free trade agreements restrict foreign investment in local markets.
Free trade agreements are only between countries in the same continent.
What role do exchange rates play in international trade?
Exchange rates have no impact on trade agreements.
Exchange rates are solely determined by government policies.
Exchange rates impact the cost of goods and services in international trade, influencing import and export levels.
Exchange rates only affect domestic prices.
What is the World Trade Organization (WTO)?
The World Trade Organization (WTO) is an international organization that oversees and facilitates global trade agreements and dispute resolution.
A military alliance for trade protection
An organization that regulates environmental policies
A global currency exchange platform
How do quotas impact the import and export of goods?
Quotas increase the volume of goods traded, lowering prices.
Quotas have no effect on the import and export of goods.
Quotas restrict the volume of goods traded, impacting prices and market availability.
Quotas only apply to domestic products and not to imports or exports.
What are the benefits and drawbacks of globalization?
increased job security
Benefits: economic growth, access to goods/services, cultural exchange. Drawbacks: job displacement, cultural homogenization, increased inequality.
reduced access to technology
cultural isolation
Define protectionism and its effects on economies.
Protectionism encourages free trade and lowers prices for consumers.
Protectionism has no impact on domestic industries or employment.
Protectionism is a policy that promotes international cooperation and trade agreements.
Protectionism is an economic policy that restricts imports to protect domestic industries, leading to higher consumer prices and potential trade retaliation.
How does international trade influence domestic markets?
International trade reduces the number of available products.
International trade influences domestic markets by increasing competition, lowering prices, expanding consumer choices, and stimulating innovation.
International trade has no effect on domestic job markets.
International trade increases government regulations on local businesses.
