International Economics and Finance Paper

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International Economy and Foundations of Modern Trade Theories Multiple Choice Questions

1.A primary reason why nations conduct international trade is 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.

2.Free traders maintain that an open economy is advantageous in that it provides all of the following except

a)increased competition for world producers.
b)a wider selection of products for consumers.
c)the utilization of the most efficient production methods. d)relatively high wage levels for all domestic workers.

3.International trade in goods and services tends to

a)increase all domestic costs and prices.
b)keep all domestic costs and prices at the same level. c)lessen the amount of competition facing home manufacturers. d)increase the amount of competition facing home manufacturers.

4.Technological improvements are similar to international trade since they both

a)provide benefits for all producers and consumers. b)increase the nation's aggregate income.
c)reduce unemployment for all domestic workers. d)ensure that industries can operate at less than full capacity.

5.A sudden shift from import tariffs to free trade may induce short-term unemployment in:

a)import-competing industries.
b)industries that are only exporters.
c)industries that sell domestically as well as export. d)industries that neither import nor export.

6.International trade tends to cause welfare losses to at least some groups in the country:

a)The less...
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