Question 1

Explain how specialisation and trade benefit all trading partners, even those that may be inefficient producers in an absolute sense.

Accepted Answer

Trade allows countries to specialise in ...

Question 2

What are some of the limitations of specialisation and trade?

Accepted Answer

As countries specialise and start tradin...

Question 3

What are some of the non- economic reasons for restricting international trade?

Accepted Answer

• A country may wish to maintain a degree of self- sufficiency in case trade is cut off.
• in times of war. This may apply particularly to the production of food and armaments.
• A country may decide not to trade with certain countries with which it disagrees politically.
• A country may wish to preserve traditional ways of life and prevent the importation of foreign values.
• A country may prefer to retain as diverse a society as possible, rather than one too narrowly based on certain industries. This is more likely to be a problem for smaller economies.

Question 4

The infant industry argument for protection is abused, but it is valid. In some cases new industries may well need protection from more powerful competitors.

Accepted Answer

A) True 
 B)False  TRUE

Question 5

If the intellectual case for free trade, based on specialisation and comparative advantage, is so powerful, then why are protectionist policies so attractive to politicians in the US?

Accepted Answer

Protectionist policies are attractive to...

Question 6

The WTO has no power to impose sanctions on countries breaking trade agreements.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a rule for trade under GATT?

Accepted Answer

A)   Greater protection for developing countries
B)   The most- favoured- nation clause
C)   Reciprocity of tariff reductions between countries
D)   Quotas on agricultural imports are prohibitedE) A) and B)
F) A) and C)

Question 8

The case for free trade is based on the theory of absolute advantage.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following examples refers to licensing?

Accepted Answer

A)   Governments or local authorities permitting only national firms to operate domestic coach and bus services
B)   Credit controls that favour domestic firms
C)   Governments preferring to buy military equipment from domestic armaments manufacturers
D)   Professions that only recognise their own national qualificationsE) A) and B)
F) A) and C) A

Question 10

Which of the following is not a problem with protection?

Accepted Answer

A)   It risks retaliation from other countries.
B)   It may be a second- best solution.
C)   It reduces the amount supplied by domestic producers.
D)   It leads to a smaller world multiplier.E) None of the above
F) A) and D)

Question 11

The following diagram shows a country which is a price- taker in world trade for a particular product. It initially has a tariff on the product as shown by the vertical difference between the two world supply curves.
   If the tariff were abolished, the net efficiency gain would be areas

Accepted Answer

A)   2 and 4
B)   3
C)   1 and 3
D)   1, 2, 3 and 4E) B) and C)
F) B) and D)

Question 12

What is the role of the WTO?

Accepted Answer

The General Agreement on Tariffs and Tra...

Question 13

The efficiency loss from protection is the net loss in consumer, producer and government surplus.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements are true?
(i)  The average annual growth in world output was higher than the growth in world exports.
(ii)  Trade is expected to continue to increase as a percentage of world GDP.
(iii)  The developed economy's share of world trade has been growing.
(iv)  The most rapid growth in trade can be found in developing countries.
(v)  With increased trade, countries have become more interdependent.
(vi)  The BRICS have seen especially rapid growth in trade.

Accepted Answer

A)   (ii) , (iv) , (v)  and (vi) 
B)   (i) , (iii) , (iv)  and (vi) 
C)   (i) , (iv)  and (vi) 
D)   (ii) , (iv)  and (vi) 
E)   (iii) , (iv)  and (v) F) A) and C)
G) All of the above

Question 15

One of the main reasons for engaging in trade is to enjoy the benefits of economies scale.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is not true?

Accepted Answer

A)   Trade is beneficial because it allows everyone to have a higher standard of living.
B)   Trade is beneficial because it allows consumption beyond the production possibility frontier.
C)   Trade is beneficial because it allows more efficient production.
D)   Trade is beneficial because it allows consumers to buy goods at cheaper prices.E) A) and D)
F) A) and C)

Question 17

Discuss some of the possible drawbacks of protectionism.

Accepted Answer

Protectionism obviously limits trade and...

Question 18

Which of the following is not a non- tariff barrier?

Accepted Answer

A)   Subsidies on domestic goods
B)   Import levies on agricultural products
C)   Administrative delays
D)   Restrictions on investment by overseas companiesE) C) and D)
F) All of the above

Question 19

The following chart shows world growth in GDP and the real value of exports.
 Which of the following statements are correct?
(i)  Export growth fluctuates more than GDP growth.
(ii)  The average rate of growth in exports from 1955 to 2011 has been higher than the average rate of growth in GDP.
(iii)  The years when the rate of growth in GDP is the higher than average tend to be the same years in which the rate of growth in exports is higher than average.

Accepted Answer

A)   (ii)  and (iii)  only
B)   (i)  and (iii)  only
C)   (i) , (ii)  and (iii) 
D)   (i)  onlyE) C) and D)
F) B) and D)

Question 20

Dumping is where exports are sold at a price below marginal cost.

Accepted Answer

A) True 
 B)False

Exam 24: International Trade

Explain how specialisation and trade benefit all trading partners, even those that may be inefficient producers in an absolute sense.

Correct Answer
verified
Trade allows countries to specialise in ...
View Answer

What are some of the limitations of specialisation and trade?

Correct Answer
verified
As countries specialise and start tradin...
View Answer

What are some of the non- economic reasons for restricting international trade?

The infant industry argument for protection is abused, but it is valid. In some cases new industries may well need protection from more powerful competitors.

Correct Answer
verified
TRUE

If the intellectual case for free trade, based on specialisation and comparative advantage, is so powerful, then why are protectionist policies so attractive to politicians in the US?

Correct Answer
verified
Protectionist policies are attractive to...
View Answer

The WTO has no power to impose sanctions on countries breaking trade agreements.

Correct Answer
verified

Which of the following is not a rule for trade under GATT?

Correct Answer
verified

The case for free trade is based on the theory of absolute advantage.

Correct Answer
verified

Which of the following examples refers to licensing?

Correct Answer
verified
A

Which of the following is not a problem with protection?

Correct Answer
verified

The following diagram shows a country which is a price- taker in world trade for a particular product. It initially has a tariff on the product as shown by the vertical difference between the two world supply curves. If the tariff were abolished, the net efficiency gain would be areas

Correct Answer
verified

What is the role of the WTO?

Correct Answer
verified
The General Agreement on Tariffs and Tra...
View Answer

The efficiency loss from protection is the net loss in consumer, producer and government surplus.

Correct Answer
verified

Correct Answer
verified

One of the main reasons for engaging in trade is to enjoy the benefits of economies scale.

Correct Answer
verified

Which of the following statements is not true?

Correct Answer
verified

Discuss some of the possible drawbacks of protectionism.

Correct Answer
verified
Protectionism obviously limits trade and...
View Answer

Which of the following is not a non- tariff barrier?

Correct Answer
verified

Correct Answer
verified

Dumping is where exports are sold at a price below marginal cost.

Correct Answer
verified

Exam 24: International Trade

Explain how specialisation and trade benefit all trading partners, even those that may be inefficient producers in an absolute sense.

Correct AnswerverifiedTrade allows countries to specialise in ...View AnswerShow Answer

What are some of the limitations of specialisation and trade?

Correct AnswerverifiedAs countries specialise and start tradin...View AnswerShow Answer

What are some of the non- economic reasons for restricting international trade?

The infant industry argument for protection is abused, but it is valid. In some cases new industries may well need protection from more powerful competitors.

Correct AnswerverifiedTRUE

If the intellectual case for free trade, based on specialisation and comparative advantage, is so powerful, then why are protectionist policies so attractive to politicians in the US?

Correct AnswerverifiedProtectionist policies are attractive to...View AnswerShow Answer

The WTO has no power to impose sanctions on countries breaking trade agreements.

Correct AnswerverifiedShow Answer

Which of the following is not a rule for trade under GATT?

Correct AnswerverifiedShow Answer

The case for free trade is based on the theory of absolute advantage.

Correct AnswerverifiedShow Answer

Which of the following examples refers to licensing?

Correct AnswerverifiedA

Which of the following is not a problem with protection?

Correct AnswerverifiedShow Answer

The following diagram shows a country which is a price- taker in world trade for a particular product. It initially has a tariff on the product as shown by the vertical difference between the two world supply curves. If the tariff were abolished, the net efficiency gain would be areas

Correct AnswerverifiedShow Answer

What is the role of the WTO?

Correct AnswerverifiedThe General Agreement on Tariffs and Tra...View AnswerShow Answer

The efficiency loss from protection is the net loss in consumer, producer and government surplus.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One of the main reasons for engaging in trade is to enjoy the benefits of economies scale.

Correct AnswerverifiedShow Answer

Which of the following statements is not true?

Correct AnswerverifiedShow Answer

Discuss some of the possible drawbacks of protectionism.

Correct AnswerverifiedProtectionism obviously limits trade and...View AnswerShow Answer

Which of the following is not a non- tariff barrier?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Dumping is where exports are sold at a price below marginal cost.

Correct AnswerverifiedShow Answer

Correct Answer
verified
Trade allows countries to specialise in ...
View Answer

Correct Answer
verified
As countries specialise and start tradin...
View Answer

Correct Answer
verified
TRUE

Correct Answer
verified
Protectionist policies are attractive to...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The General Agreement on Tariffs and Tra...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Protectionism obviously limits trade and...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified