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

What is the purpose of a trade embargo?

A) To promote trade between countries

B) To restrict or prohibit trade with a specific country

C) To encourage foreign investment

D) None of the above

Dumping is considered unfair trade practice when it:

A) Results in higher prices for consumers in the importing country

B) Reduces domestic employment in the exporting country

C) Involves selling goods below cost to gain market share

D) None of the above

Which trade policy aims to reduce trade barriers and promote free trade among participating countries?

A) Protectionism

B) Export-oriented policy

C) Regional Trade Agreement

D) Import substitution policy

The General Agreement on Tariffs and Trade (GATT) was replaced by the:

A) World Economic Forum

B) World Bank

C) World Trade Organization (WTO)

D) International Monetary Fund (IMF)

What is the primary function of the World Trade Organization (WTO)?

A) Providing financial aid to developing countries

B) Facilitating negotiations on trade agreements and resolving trade disputes

C) Promoting regional economic integration

D) None of the above

Which of the following is NOT a trade restriction?

A) Export subsidy

B) Quota

C) Tariff

D) Free trade agreement

The term “trade deficit” refers to:

A) Exports exceeding imports

B) Imports exceeding exports

C) Balance of trade being zero

D) None of the above

Which trade policy emphasizes reducing trade barriers, tariffs, and import quotas?

A) Import substitution policy

B) Protectionism

C) Free trade policy

D) Dumping

The principle of “comparative advantage” suggests that countries should specialize in producing goods:

A) Where they have an absolute advantage

B) That can be produced with the least amount of resources

C) That offer the highest profit margins

D) None of the above

The term “tariff” refers to:

A) A tax imposed on exports

B) A tax imposed on imports

C) A subsidy given to domestic producers

D) None of the above