CBE International Trade 2

Question 1

Which trade policy tool imposes a fixed limit on the quantity of a good that can be imported?

Accepted Answer

Import quota

Answer

An import quota is a quantitative restriction that sets a maximum limit on the amount of a specific good that can be imported during a given period.

Question 2

The Heckscher-Ohlin theorem predicts that a country will export goods that intensively use its:

Accepted Answer

Abundant factors of production

Answer

The Heckscher-Ohlin theorem states that countries export goods whose production requires intensive use of their relatively abundant factors, such as labor or capital.

Question 3

When a country's currency depreciates, what typically happens to its trade balance in the short run according to the J-curve effect?

Accepted Answer

Temporarily worsens before improving

Answer

The J-curve effect describes how a currency depreciation initially worsens the trade balance because import/export volumes adjust more slowly than prices.

Question 4

Which organization replaced GATT as the primary international body governing trade rules in 1995?

Accepted Answer

WTO

Answer

The World Trade Organization (WTO) replaced the General Agreement on Tariffs and Trade (GATT) in January 1995 as the main international body overseeing global trade rules.

Question 5

A trade surplus occurs when a country's:

Accepted Answer

Exports exceed imports

Answer

A trade surplus exists when the value of a country's exports is greater than the value of its imports over a given period.

(CBE) Certified Business Economist Practice Test

(CBE) Certified Business Economist Practice Test

CBE International Trade 2