CBE International Trade 3

Question 1

In trade theory, 'terms of trade' refers to:

Accepted Answer

The ratio of export prices to import prices

Answer

Terms of trade measure the relative price of a country's exports compared to its imports, indicating the purchasing power of exports in terms of imports.

Question 2

Which trade agreement created the world's largest free trade area by GDP when it came into force in 2022?

Accepted Answer

RCEP

Answer

The Regional Comprehensive Economic Partnership (RCEP), comprising 15 Asia-Pacific nations, became the world's largest free trade agreement by combined GDP when it took effect in January 2022.

Question 3

A specific tariff is calculated as:

Accepted Answer

A fixed dollar amount per unit of the imported good

Answer

A specific tariff is a fixed monetary charge per physical unit of the imported good (e.g., $5 per ton), regardless of the good's price.

Question 4

Which concept describes the situation where a domestic industry is protected in its early stages to allow it to grow and compete internationally?

Accepted Answer

Infant industry argument

Answer

The infant industry argument justifies temporary protection of new domestic industries that have not yet achieved the scale or experience to compete with established foreign rivals.

Question 5

The Stolper-Samuelson theorem predicts that trade liberalization will:

Accepted Answer

Benefit the abundant factor and harm the scarce factor

Answer

The Stolper-Samuelson theorem states that opening to trade raises the real return of the abundant factor and lowers the real return of the scarce factor in each country.

(CBE) Certified Business Economist Practice Test

(CBE) Certified Business Economist Practice Test

CBE International Trade 3