Introduction to International Trade
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This set of International Business Multiple Choice Questions & Answers (MCQs) focuses on Introduction to International Trade
Q1 | What are the four factor endowments?
- national resources, labor, physical capital and human capital
- types of technology
- material inputs used up in the process of production
- international differences in climate
Q2 | The Heckscher- Ohlin model is principally focused on what aspect of economics?
- international trade
- supply and demand
- normative economics
- production possibility frontier
Q3 | A no-trade world will have which of the following characteristics:
- countries will have same relative endowments of production factors
- consumers across countries will have identical and homogenous tastes
- there will be no distortions or externalities
- all of the above
Q4 | Transportation cost of trade affects:
- pattern of trade
- boundaries between tradable and non-tradable goods
- global supply chains
- all of the above
Q5 | International Trade is most likely to generate short-term unemployment in:
- industries in which there are neither imports nor exports
- import-competing industries
- industries that sell to domestic and foreign buyers.
- industries that sell to only foreign buyers
Q6 | What was the first economic theory of international trade to be developed?
- the theory of mercantilism
- the theory of comparative advantage
- the theory of absolute advantage
- the heckscher-ohlin theory
Q7 | According to Adam Smith, the trade between countries should happen _____.
- naturally according to the market forces
- under government regulation
- using factors that are available
- only when a country has an absolute advantage
Q8 | If a nation has an open economy it means that the nation:
- allows private ownership of capital.
- has flexible exchange rates
- has fixed exchange rates
- conducts trade with other countries
Q9 | International trade forces domestic firms to become more competitive in terms of
- the introduction of new products
- product design and quality
- product price
- all of the above
Q10 | The movement to free international trade is most likely to generate short-term unemployment in whichindustries
- industries in which there are neither imports nor exports
- import-competing industries.
- industries that sell to domestic and foreign buyers
- industries that sell to only foreign buyers
Q11 | According to the principle of comparative advantage:
- south korea should export steel
- south korea should export steel and dvds
- japan should export steel
- japan should export steel and dvds
Q12 | Country A has an absolute advantage in
- product x
- product y
- neither x nor y
- both x and y
Q13 | Globalization refers to:
- lower incomes worldwide
- less foreign trade and investment
- global warming and their effects
- a more integrated and interdependent world
Q14 | Comparative Cost Trade Theory is given by
- adam smith
- david ricardo
- gottfried haberle
- heckscher ohlin
Q15 | ……………...is the payment method most often used in International Trade which offers the exporter bestassurance of being paid for the products sold internationally.
- bill of lading
- letter of credit
- open account
- drafts
Q16 | Key controllable factors in global marketing are:
- government policy and legislation
- social and technical changes
- marketing activities and plans
- all of the above.
Q17 | The first phase of globalization started around 1870 and ended with …..
- world war i
- world war ii
- the establishment of gatt
- in 1913 when gdp was high
Q18 | According to this theory, the holdings of a country’s treasure primarily in the form of gold constituted itswealth.
- gold theory
- ricardo theory
- mercantilism
- hecksher theory
Q19 | The Theory of Absolute Cost Advantage is given by
- david ricardo
- adam smith
- f w taylor
- ohlin and heckscher
Q20 | The Theory of Relative Factor Endowments is given by
- david ricardo
- adam smith
- c. f w taussig
- ohlin and hecksher
Q21 | The theory of comparative cost advantage is given by
- david ricardo
- adam smith
- f w taussig
- ohlin and heckscher
Q22 | A multinational is a firm that controls and manages production facilities in
- both developed and developing countries
- at least two countries
- one country but relies on multiple markets for the consumption of goods it produces
- at least two developed countries and one developing country
Q23 | Locational advantages are based on which combination of the following specific country characteristics
- a large reserve of natural resources, a large local market and efficiency opportunities
- a small reserve of natural resources, a large local market and efficiency opportunities
- a small reserve of natural resources, a small local market and efficiency opportunities
- a large reserve of natural resources, a small local market and efficiency opportunities
Q24 | Horizontal integration occurs when
- firm creates singular country production facilities, each of which produces different good or goods
- firm creates multiple production facilities, each of which produces the same good or goods.
- firm creates multiple production facilities, each of which produces different good or goods
- firm creates singular country facilities, each of which produces the same good or goods
Q25 | Which of the following would be an example of foreign direct investment from the United States toTaiwan?
- a u.s. bank buys bonds issued by a taiwan computer manufacturer.
- a u.s. car manufacturer enters into a contract with a taiwan firm to make and sell it spark plugs.
- microsoft hires a taiwanese computer programmer to debug some software for it.
- the state of california rents space in taipei for one of its employees to use promoting tourism in