International Trade: Theories, Trade Restrictions & Trade Policy, MCQs

The theory of comparative advantage was proposed by:

A) John Maynard Keynes

B) Adam Smith

C) David Ricardo

D) Karl Marx

Tariffs and quotas are examples of:

A) Trade liberalization

B) Trade restrictions

C) Trade agreements

D) Trade deficits

Export subsidies aim to:

A) Encourage imports

B) Discourage exports

C) Promote domestic production for export

D) Increase trade deficits

The World Trade Organization (WTO) aims to:

A) Promote free trade and resolve trade disputes

B) Impose trade restrictions on developing countries

C) Regulate international currency exchange rates

D) Restrict multinational corporations

Dumping refers to:

A) Exporting goods below cost to gain market share

B) Importing goods at a high cost to protect domestic industries

C) Regulating currency exchange rates

D) Establishing trade agreements

Which theory of international trade suggests that countries should specialize in producing goods where they have a comparative advantage?

A) Mercantilism

B) Absolute Advantage

C) Comparative Advantage

D) Factor Proportions Theory

According to the theory of Absolute Advantage, trade occurs because:

A) Countries have different production costs for the same goods

B) Countries have a natural advantage in producing certain goods

C) Countries prefer to be self-sufficient

D) None of the above

The Heckscher-Ohlin theory of international trade emphasizes the importance of:

A) Labor productivity differences between countries

B) Differences in factor endowments (land, labor, capital)

C) Export subsidies and tariffs

D) None of the above

Which trade theory suggests that countries should export goods that intensively use the factors of production that are locally abundant?

A) Absolute Advantage

B) Factor Proportions Theory

C) New Trade Theory

D) None of the above

Dumping refers to:

A) Selling goods in foreign markets at a lower price than in domestic markets

B) Government subsidies provided to domestic industries

C) Trade barriers imposed by importing countries

D) None of the above