15 MCQ on Elements of international economic relations with answers

15 MCQ on Elements of international economic relations with answers

1. What is the primary objective of international economic relations?

   A) Promoting cultural exchange

   B) Ensuring political stability

   C) Facilitating economic cooperation among nations

   D) Enhancing military capabilities

   Answer: C) Facilitating economic cooperation among nations

2. Which of the following institutions plays a central role in overseeing the global financial system and providing loans to countries in need?

   A) World Health Organization (WHO)

   B) International Monetary Fund (IMF)

   C) United Nations Educational, Scientific and Cultural Organization (UNESCO)

   D) World Trade Organization (WTO)

   Answer: B) International Monetary Fund (IMF)

3. The concept of "comparative advantage" in international trade theory suggests that countries should specialize in producing goods and services in which they have:

   A) The highest production costs

   B) The lowest opportunity costs

   C) The most abundant natural resources

   D) The highest domestic demand

   Answer: B) The lowest opportunity costs

4. Which trade theory argues that countries benefit from trading goods and services they produce most efficiently, even if they can produce everything more efficiently than other countries?

   A) Mercantilism

   B) Comparative advantage

   C) Absolute advantage

   D) Factor endowment theory

   Answer: C) Absolute advantage

5. The term "balance of payments" refers to:

   A) The difference between a country's exports and imports of goods and services

   B) The exchange rate between two currencies

   C) The amount of money in circulation within a country

   D) The overall economic output of a country

   Answer: A) The difference between a country's exports and imports of goods and services

6. Which of the following is NOT a component of the balance of payments?

   A) Current account

   B) Financial account

   C) Trade account

   D) Capital account

   Answer: C) Trade account

7. The theory of comparative advantage was first articulated by:

   A) Adam Smith

   B) David Ricardo

   C) John Maynard Keynes

   D) Karl Marx

   Answer: B) David Ricardo

8. Which international organization is responsible for negotiating and implementing trade agreements among member countries?

   A) International Monetary Fund (IMF)

   B) World Trade Organization (WTO)

   C) United Nations (UN)

   D) Organization for Economic Cooperation and Development (OECD)

   Answer: B) World Trade Organization (WTO)

9. The term "tariff" refers to:

   A) A tax imposed on imports or exports

   B) A restriction on the quantity of a good that can be imported or exported

   C) A government subsidy provided to domestic producers

   D) A trade agreement between two countries

   Answer: A) A tax imposed on imports or exports

10. Which trade theory emphasizes the role of factor endowments, such as labor, land, and capital, in determining comparative advantage?

    A) Absolute advantage

    B) Comparative advantage

    C) Heckscher-Ohlin theory

    D) New trade theory

    Answer: C) Heckscher-Ohlin theory

11. The Bretton Woods Conference in 1944 led to the establishment of which two major international financial institutions?

    A) World Bank and International Monetary Fund (IMF)

    B) World Trade Organization (WTO) and European Union (EU)

    C) United Nations (UN) and North Atlantic Treaty Organization (NATO)

    D) Organization of Petroleum Exporting Countries (OPEC) and Asian Development Bank (ADB)

    Answer: A) World Bank and International Monetary Fund (IMF)

12. Which term refers to the practice of selling goods abroad at a price lower than their production cost or fair market value?

    A) Dumping

    B) Subsidization

    C) Quota

    D) Embargo

    Answer: A) Dumping

13. The "Washington Consensus" refers to a set of economic policies that advocate for:

    A) Increased government intervention in the economy

    B) Protectionist trade measures

    C) Deregulation, privatization, and free market reforms

    D) Expansionary fiscal policies

    Answer: C) Deregulation, privatization, and free market reforms

14. Which term describes a situation where a country imports more goods and services than it exports?

    A) Trade deficit

    B) Trade surplus

    C) Balance of payments surplus

    D) Balance of payments deficit

    Answer: A) Trade deficit

15. The General Agreement on Tariffs and Trade (GATT) was replaced by the World Trade Organization (WTO) in which year?

    A) 1989

    B) 1994

    C) 2001

    D) 2010

    Answer: B) 1994