Introduction to International Trade MCQ Questions

Please go through Introduction to International Trade MCQ Questions with Answers provided below. Students should have strong knowledge about Introduction to International Trade as in various competition exams, MCQ questions are asked from this topic. We have provided below the biggest collection of Introduction to International Trade MCQ with Answers. These International Business MCQ Questions and objective questions will improve your performance in exams and help you to get good scores.

Multiple Choice Questions for The Introduction to International Trade with Answers

Question. The first phase of globalization started around 1870 and ended with …..
(a) World War I
(b) World War II
(c) The Establishment of GATT
(d) In 1913 when GDP was High

Question. In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in
(a) Military capabilities
(b) labor productivities
(c) relative availabilities of factors of production
(d) tastes

Question. Nations conduct international trade because:
(a) Some nations prefer to produce one thing while others produce other things.
(b) Resources are not equally distributed among all trading nations.
(c) Trade enhances opportunities to accumulate profits.
(d) Interest rates are not identical in all trading nations

Question. According to this theory, the holdings of a country’s treasure primarily in the form of gold constituted its wealth.
(a) Gold Theory
(b) Ricardo Theory
(c) Mercantilism
(d) Hecksher Theory

Question. The Heckscher- Ohlin model is principally focused on what aspect of economics?
(a) International trade
(b) Supply and demand
(c) Normative economics
(d) Production possibility frontier

Question. Which of the following trade policies limits specified quantity of goods to be imported at one tariff rate?
(a) Quota
(b) Import tariff
(c) Specific tariff
(d) All of the above

Question. International Trade is most likely to generate short-term unemployment in:
(a) Industries in which there are neither imports nor exports
(b) Import-competing industries
(c) Industries that sell to domestic and foreign buyers.
(d) Industries that sell to only foreign buyers

Question. What was the first economic theory of international trade to be developed?
(a) The theory of mercantilism
(b) The theory of comparative advantage
(c) The theory of absolute advantage
(d) The Heckscher-Ohlin theory

Question. The Theory of Relative Factor Endowments is given by
(a) David Ricardo
(b) Adam Smith
(c) c. F W Taussig
(d) Ohlin and Hecksher

Question. The theory of comparative cost advantage is given by
(a) David Ricardo
(b) Adam Smith
(c) F W Taussig
(d) Ohlin and Heckscher

Question. Mercantilists believed that a country could increase the amount of wealth it had by _____.
(a) Promoting exports and discouraging imports
(b) Discouraging exports and promoting imports
(c) Controlling imports and exports
(d) Increasing both imports and exports

Question. International trade forces domestic firms to become more competitive in terms of
(a) The introduction of new products
(b) Product design and quality
(c) Product price
(d) All of the above

Question. How is comparative advantage defined?
(a) You produce the things you are especially good at, and buy from others, the goods you are less efficient in producing.
(b) To produce and consume all goods without trade.
(c) How the world actually works.
(d) Globalization, growing economic linkages among countries.

Question. What are the four factor endowments?
(a) National resources, labor, physical capital and human capital
(b) Types of technology
(c) Material inputs used up in the process of production
(d) International differences in climate

Question. The movement to free international trade is most likely to generate short-term unemployment in which industries
(a) Industries in which there are neither imports nor exports
(b) Import-competing industries.
(c) Industries that sell to domestic and foreign buyers
(d) Industries that sell to only foreign buyers

Question. Increased foreign competition tend to
(a) Intensify inflationary pressure at home
(b) Induce falling output per worker-hour for domestic workers
(c) Place constraints on the wages of domestic workers
(d) Increase profits of domestic import-competing industries

Question. ………………is the payment method most often used in International Trade which offers the exporter best assurance of being paid for the products sold internationally.
(a) Bill of Lading
(b) Letter of Credit
(c) Open Account
(d) Drafts

Question. Key controllable factors in global marketing are:
(a) Government policy and legislation
(b) social and technical changes
(c) marketing activities and plans
(d) all of the above.

Question. The Theory of Absolute Cost Advantage is given by
(a) David Ricardo
(b) Adam Smith
(c) F W Taylor
(d) Ohlin and Heckscher

Question. Globalization refers to:
(a) Lower incomes worldwide
(b) Less foreign trade and investment
(c) Global warming and their effects
(d) A more integrated and interdependent world

Question. A no-trade world will have which of the following characteristics:
(a) Countries will have same relative endowments of production factors
(b) Consumers across countries will have identical and homogenous tastes
(c) There will be no distortions or externalities
(d) all of the above

Question. Transportation cost of trade affects:
(a) pattern of trade
(b) boundaries between tradable and non-tradable goods
(c) Global supply chains
(d) all of the above

Question. Comparative Cost Trade Theory is given by
(a) Adam Smith
(b) David Ricardo
(c) Gottfried Haberle
(d) Heckscher Ohlin

Question. According to Adam Smith, the trade between countries should happen _____.
(a) Naturally according to the market forces
(b) Under government regulation
(c) Using factors that are available
(d) Only when a country has an absolute advantage

Question. If a nation has an open economy it means that the nation:
(a) Allows private ownership of capital.
(b) Has flexible exchange rates
(c) Has fixed exchange rates
(d) Conducts trade with other countries

Answer the following questions based on the production table below:

Question. If the countries were to trade along the lines of absolute advantage:
(a) A would export X to B
(b) B would import Y from A
(c) Neither country would want to trade

Question. Country A has an absolute advantage in
(a) Product X
(b) Product Y
(c) Neither X nor Y
(d) Both X and Y

Question. If countries were to trade along the lines of comparative advantage:
(a) A would export X to B
(b) A would export Y to B
(c) Neither country would want to trade

Question. Country B has an absolute advantage in
(a) Product X
(b) Product Y
(c) Neither X nor Y
(d) Both X and Y

Use the information in the table below to answer the following questions:

Country	Tons of steel	DVDs
South Korea	80	40
Japan	20	20

Question. According to the principle of comparative advantage:
(a) South Korea should export steel
(b) South Korea should export steel and DVDs
(c) Japan should export steel
(d) Japan should export steel and DVDs

Question. The opportunity cost of one DVD in Japan:
(a) One ton of steel
(b) Two tons of steel
(c) Three tons of steel
(d) Four tons of steel

Question. The opportunity cost of one DVD in South Korea is:
(a) One-half ton of steel
(b) One ton of steel
(c) One and one-half tons of steel
(d) Two tons of steel