MIB International Trade & Policy

Question 1

The World Trade Organization (WTO) principle of 'Most Favored Nation' (MFN) requires that:

Accepted Answer

Any trade advantage given to one country must be extended to all WTO members

Answer

Countries give preferential treatment to their top trading partners

Answer

Developing countries receive preferential tariff rates

Answer

Nations maintain balanced bilateral trade relationships

Question 2

Which trade theory suggests that countries should export goods in which they have a lower opportunity cost of production?

Accepted Answer

Comparative advantage theory

Answer

Absolute advantage theory

Answer

Heckscher-Ohlin theorem

Answer

Product life cycle theory

Question 3

A tariff-rate quota (TRQ) in international trade policy means:

Accepted Answer

A lower tariff rate applies up to a set import quantity, higher rate beyond

Answer

A fixed tariff rate applied to all imports regardless of quantity

Answer

A quota that completely bans imports above a threshold

Answer

Equal tariff rates applied to all trading partners

Question 4

The 'Heckscher-Ohlin (H-O) theorem' predicts that a country will export goods that:

Accepted Answer

Intensively use the country's relatively abundant factor of production

Answer

It produces with the most advanced technology

Answer

Have the highest global demand

Answer

Require the most skilled labor

Question 5

Which non-tariff barrier involves a government setting technical standards that foreign products must meet to enter the market?

Accepted Answer

Technical barriers to trade (TBT)

Answer

Import licensing

Answer

Voluntary export restraint

Answer

Countervailing duties

Question 6

A 'preferential trade agreement' (PTA) differs from a free trade agreement (FTA) in that it:

Accepted Answer

Reduces (but doesn't eliminate) tariffs on selected goods

Answer

Eliminates all tariffs between member nations

Answer

Creates a common external tariff

Answer

Allows free movement of labor and capital