International Economics Quiz

Multiple Choice

1. International economics is the study of:

A. Global financial markets B. The relationships between countries C. The economics of different cultures D. The international trade of goods and services

Answer: D. The international trade of goods and services

1. The balance of payments is a record of:

A. A country's total imports and exports B. A country's international investments C. A country's total debt and assets D. A country's balance of trade

Answer: A. A country's total imports and exports

1. Which of the following is an example of a free trade agreement?

A. The European Union B. The North American Free Trade Agreement (NAFTA) C. The Trans-Pacific Partnership (TPP) D. The International Monetary Fund (IMF)

Answer: B. The North American Free Trade Agreement (NAFTA)

True/False

1. A tariff is a tax placed on imports and exports.

Answer: True

1. The World Trade Organization (WTO) is an international organization that promotes free trade.

Answer: True

1. The International Monetary Fund (IMF) is an international organization that provides loans to developing countries.

Answer: True

Fill-in-the-Blank

1. The ___________ is an international organization that sets monetary policy and ensures the stability of the global financial system.

Answer: International Monetary Fund (IMF)

1. An ___________ is a tax placed on imports and exports.

Answer: tariff

1. The ___________ is an international organization that promotes free trade.

Answer: World Trade Organization (WTO)

Short Answer

1. What is the purpose of the General Agreement on Tariffs and Trade (GATT)?

Answer: The General Agreement on Tariffs and Trade (GATT) is an international agreement that sets rules for international trade and liberalizes trade by reducing tariffs and other trade barriers. The purpose of GATT is to promote free trade and reduce protectionism.

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International Economics Practice Sheet

Introduction to International Economics

International Economics is the study of economic interactions between countries. It focuses on the impact of international trade, investment, and finance on the global economy.

Key Concepts

1. Trade: The exchange of goods and services between countries.

2. Tariffs: Taxes on imported goods.

3. Balance of Payments: A record of all economic transactions between a country and the rest of the world.

4. Exchange Rates: The rate at which one currency can be exchanged for another.

5. Foreign Direct Investment (FDI): Investments made by a foreign entity into a domestic entity.

6. Comparative Advantage: A country has a comparative advantage in a certain good or service when it can produce it at a lower cost than other countries.

Practice Problems

1. A country has an absolute advantage in producing a good if: A. It can produce the good at a lower cost than other countries. B. It can produce the good faster than other countries. C. It can produce the good more efficiently than other countries. D. It can produce the good in larger quantities than other countries.

Answer: C. It can produce the good more efficiently than other countries.

1. A country has a trade deficit when: A. It imports more than it exports. B. It exports more than it imports. C. It has a balance of payments surplus. D. It has a balance of payments deficit.

Answer: A. It imports more than it exports.

1. A country experiences a depreciation in its currency when: A. The value of its currency increases. B. The value of its currency decreases. C. The demand for its currency increases. D. The demand for its currency decreases.

Answer: B. The value of its currency decreases.