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International Trade Mid-Term Exam: Multiple Choice Questions, Quizzes of Foreign Trade

Vietnam National University Hanoi (VNUH)Foreign Trade

A mid-term exam for an international trade course, consisting of 29 multiple-choice questions covering various aspects of international trade theory and practice. The questions explore topics such as comparative advantage, terms of trade, trade policies, economies of scale, and the heckscher-ohlin model. This exam provides a valuable resource for students studying international trade, offering insights into key concepts and their application.

Typology: Quizzes

2024/2025

Uploaded on 04/06/2025

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CAO QUE
1
1
International Trade
MID-TERM EXAM
International Trade (Time: 90 minutes)
Class: .............................
Student name: ................
ID:
PART I: MULTIPLE CHOICE QUESTIONS (Circle the right answer) - 60 points
1. A primary reason why nations conduct
international trade is because
A. Some nations prefer to produce one
thing while others produce another
B. Resources are not equally distributed to
all trading nations
C. Trade enhances opportunities to
accumulate profits
D. Interest rates are not identical in all
trading nations
2. International trade is narrowly defined
as
A. The exchange of labor across national
borders
B. The exchange of capital across national
borders
C. The exchange of goods and services
across national borders
D. The exchange of money across
national borders
3. Re-export means
A. To export goods and services to a
foreign country, going through a third
country
B. To export goods and services that have
been imported from aboard
C. To export unprocessed goods and
services to foreign countries
D. To export goods and services without
doing export procedures out of Vietnam
4. The source of beneficial free trade in
the Ricardian world is
A. Comparative advantage based on
different factor endowments
B. Comparative advantage based on
different labor productivities
C. Economies of scale in production
D. Comparative advantage based on
increasing returns to scale technology
5. According to the factor endowment
model of Heckscher and Ohlin, countries
heavily endowed with land will
A. Devote excessive amounts of
resources to agricultural production
B. Devote insufficient amounts of
resources to agricultural production
C. Export products that are land-intensive
D. Import products that are land-intensive
6. The concept “terms of trade” means
A. The amount of exports sold by a
country
B. The price conditions bargained for in
international markets
C. The price of a country's exports divided
by the price of its imports
D. The quantities of imports received in
free trade
7. Export-biased growth in Home will
A. Improve the terms of trade of Home
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pf4
pf5
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pf9
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pfd
pfe

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MID-TERM EXAM

International Trade (Time: 90 minutes) Class: ............................. Student name: ................ ID: PART I: MULTIPLE CHOICE QUESTIONS (Circle the right answer) - 60 points

  1. A primary reason why nations conduct international trade is because A. Some nations prefer to produce one thing while others produce another B. Resources are not equally distributed to all trading nations C. Trade enhances opportunities to accumulate profits D. Interest rates are not identical in all trading nations
  2. International trade is narrowly defined as A. The exchange of labor across national borders B. The exchange of capital across national borders C. The exchange of goods and services across national borders D. The exchange of money across national borders
  3. Re-export means A. To export goods and services to a foreign country, going through a third country B. To export goods and services that have been imported from aboard C. To export unprocessed goods and services to foreign countries D. To export goods and services without doing export procedures out of Vietnam
    1. The source of beneficial free trade in the Ricardian world is A. Comparative advantage based on different factor endowments B. Comparative advantage based on different labor productivities C. Economies of scale in production D. Comparative advantage based on increasing returns to scale technology
    2. According to the factor endowment model of Heckscher and Ohlin, countries heavily endowed with land will A. Devote excessive amounts of resources to agricultural production B. Devote insufficient amounts of resources to agricultural production C. Export products that are land-intensive D. Import products that are land-intensive
    3. The concept “terms of trade” means A. The amount of exports sold by a country B. The price conditions bargained for in international markets C. The price of a country's exports divided by the price of its imports D. The quantities of imports received in free trade
    4. Export-biased growth in Home will A. Improve the terms of trade of Home

B. Trigger anti-bias regulations of the WTO C. Worsen the terms of trade of Foreign (the trade partner) D. Improve the terms of trade of Foreign

  1. How is an export subsidy by a large country different from an import quota by a large country? A. An export subsidy worsens terms of trade while an import quota improves them B. Unlike the welfare effects of an import quota, the welfare effects of an export subsidy are ambiguous C. An export subsidy improves terms of trade while an import quota worsens them D. They are not different The effects on income distribution are the same
  2. If the tariff on computers is not changed, but the government then adds hitherto nonexistent tariffs on imported semi-conductor components, then the effective rate of protection in the computer industry will A. Increase B. Decrease C. Remain the same D. Depend on whether computers are personal computers or “Supercomputers”
  3. Where there are economies of scale, an increase in the size of the market will A. Increase the number of firms and raise the price per unit B. Decrease the number of firms and raise the price per unit C. Increase the number of firms and lower the price per unit D. Decrease the number of firms and lower the price per unit
  4. If Australia has more land per worker, and Belgium has more capital per worker, then if trade were to open up between these two countries A. Australia would export the land- intensive product B. Belgium would import the capital- intensive product C. Both countries would export some of each product D. Trade would not continue since Belgium is a smaller country
    1. According to the Standard Trade Model exposited in the text, the offer of a subsidy on the export good by the Home country A. Increase the relative supply of cloth from RSI to RS B. Reduces the relative demand of cloth from RD1 to RD C. The relative price of cloth and the terms of trade falls from (PC/PF)1 to (PC/PF) D. All of the above
    2. If, beginning from a free trade equilibrium, the terms of trade improve for a country, then it will A. Increase production of its import competing good B. Increase consumption of its export good C. Increase the quantity of its imports D. Experience an export-biased shift in its production possibility frontier
    3. An important difference between tariffs and quotas is that tariffs A. Raise the price of the good B. Generate tax revenue for the government C. Stimulate international trade D. Help domestic producers
    4. If Pc/Pf were to increase in the international marketplace, then A. All countries would be better off

D. Help consumers but lower economic welfare of the exporting country

  1. Where there are economies of scale, an increase in the size of the market will A. Increase the number of firms and raise the price per unit B. Decrease the number of firms and raise the price per unit C. Increase the number of firms and lower the price per unit D. Decrease the number of firms and lower the price per unit
  2. Internal economies of scale A. May be associated with a perfectly competitive industry B. Cannot be associated with a perfectly competitive industry C. Are associated only with sophisticated products such as aircraft D. Cannot form the basis for international trade
  3. Consider Peru and Argentina in a Ricardian world. Each country produces two goods, Corn and Wheat. Each country has 600 units of labor hour available. The table of unit labor costs for production of each good in each country is below Corn Wheat Peru 2 6 Argentina 1 4 If world relative price for wheat is 3.5, then A. Relative quantity of wheat supplied is 6 B. The world relative quantity of wheat supplied is 1/ C. The world relative quantity of wheat supplied is 1/ D. The world relative quantity cannot be determined from the information given
    1. Which of the following is NOT true about the import demand curve? A. It is steeper than the domestic demand curve in the importing country B. It is flatter than the domestic demand curve in the importing country C. It slopes down D. It intersects the vertical axis at the domestic equilibrium price in autarky equilibrium
    2. Which of the following is NOT true about the export supply curve? A. It intersects the vertical axis at the foreign equilibrium price in autarky equilibrium B. It is steeper than the domestic supply curve in the exporting country C. It is flatter than the domestic supply curve in the exporting country D. It describes the excess of foreign supply over foreign demand
    3. Suppose that there are two factors, capital and land, and that the United States is relatively land endowed while the European Union is relatively capital- endowed. According to the Heckscher-Ohlin model A. European landowners should support US-European free trade B. European capitalists should support US-European free trade C. All capitalists in both countries should support free trade D. All landowners should support free trade
    4. Those who stand to gain from trade A. Do not really care about the issue of income redistribution

B. Could not compensate losers since there are so many poor people C. Could compensate losers but would rather not in modern industrial economies D. Compensate losers at least partially through such legislation as unemployment compensation

  1. When a government allows raw materials and other intermediate products to enter a country duty free, this generally results in a(an) A. Effective tariff rate less than the nominal tariff rate B. Nominal tariff rate less than the effective tariff rate C. Rise in both nominal and effective tariff rates D. Fall in both nominal and effective tariff rates
  2. According to the factor price equalization theorem, the owners of ________ factor should oppose free trade policies in any given country A. Abundant B. Scarce C. Neither D. Can’t tell without more information
  3. Which of the following will be the lowest barrier on imports of $300 digital cameras? A. An ad-valorem 5% tariff B. A specific $10 tariff C. A quota that raises the internal price of the cameras by 5% D. A compound duty of $5 and 1%
  4. If some industries exhibit internal (firm specific) increasing returns to scale in each country, we should not expect to see A. Intra-industry trade between countries B. Perfect competition in these industries C. Inter-industry trade between countries D. High levels of specialization in both countries
    1. An import tariff of $10 per unit of imported good imposed by a large country A. Increases the price of this good in the importing country by less than $10 and lowers export prices B. Increases the price of this good in the importing country by more than $10 and raises export prices C. Increases the price of this good in the importing country by $10 and leaves export prices unaffected D. Increases the volume of exports of that good by foreigners
    2. A Vietnamese shoe company imports all materials used to produce shoes from a Taiwanese company. It uses all of those materials to produce shoes and then exports back finished shoes to that Taiwanese company. This transaction is considered as A. International processing B. Re-export C. Export D. Switch trade
    3. During the 19th Century, economic growth of the major trading countries was biased toward manufactures away from food. The less developed countries of that time were net exporters of food. From this information, we would expect to have observed A. Falling terms of trade for the less developed countries B. Improving (rising) terms of trade for the less developed countries C. No change at all in the terms of trade of the less developed countries D. A decrease in the relative price of food

QUIZ 1

INTERNATIONAL TRADE

  1. A Vietnamese shoe company signs a selling contract with a Japanese company, thereby it will sell its shoes to another Vietnamese company. This transaction is considered as: A. Switch trade B. On-the-spot export C. Re-export D. Export
  2. A Vietnamese shoe company imports a container of leather from a Taiwanese company. It uses those leather to produce shoes and then exports back finished shoes to that Taiwanese company. This transaction is considered as: A. International processing B. Re-export C. Export D. Switch trade
  3. A Vietnamese shoe company imports a container of embroider from a Chinese company and then sells that container to a Lao company without doing any import procedure to Vietnam and export procedure from Vietnam. This transaction is considered as: A. Re-export B. Switch trade C. On-the-spot export D. International processing
  4. Countries trade with each other because they are ________ and because of ________. A. different, costs B. similar, scale economies C. different, scale economies D. similar, costs E. None of the above.
    1. The Ricardian theory of comparative advantage states that a country has a comparative advantage in widgets if A. output per worker of widgets is higher in that country. B. that country's exchange rate is low. C. wage rates in that country are high. D. the output per worker of widgets as compared to the output of some other product is higher in that country. E. Both B and C.
    2. In order to know whether a country has a comparative advantage in the production of one particular product, we need information on at least unit labor requirements A. one B. two C. three D. four Questions from 7 to 10 use the following information Unit Labor Requirements Cloth Widgets Home 10 20 Foreign 60 30
    3. What is the true statement? A. Neither country has a comparative advantage.

B. Home has a comparative advantage in cloth. C. Foreign has a comparative advantage in cloth. D. Home has a comparative advantage in widgets. E. Home has a comparative advantage in both products.

  1. If the Home economy suffered a meltdown, and the Unit Labor Requirements in each of the products quadrupled (that is, doubled to 30 for cloth and 60 for widgets) then home should A. export cloth. B. export widgets. C. export both and import nothing. D. export and import nothing. E. All of the above.
  2. If the world equilibrium price of widgets were 4 Cloth, then A. both countries could benefit from trade with each other. B. neither country could benefit from trade with each other. C. each country will want to export the good in which it enjoys comparative advantage. D. neither country will want to export the good in which it enjoys comparative advantage. E. both countries will want to specialize in cloth.
  3. A nation engaging in trade according to the Ricardian model will find its consumption bundle A. inside its production possibilities frontier. B. on its production possibilities frontier. C. outside its production possibilities frontier. D. inside its trade-partner's production possibilities frontier. E. on its trade-partner's production possibilities frontier.
    1. If the international terms of trade settle at a level that is between each country’s opportunity cost, A. there is no basis for gainful trade for either country B. both countries gain from trade C. only one country gains from trade D. one country gains and the other country loses from trade
    2. International trade activities does not include A. exports and imports of visible goods B. international processing C. re-export D. international movement of labor and money
    3. According to Ricardo, a country will have a comparative advantage in the product in which its A. labor productivity is relatively low. B. labor productivity is relatively high. C. labor mobility is relatively low. D. labor mobility is relatively high. E. None of the above.
    4. In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in auto relative to ships" is equivalent to: A. France having a comparative advantage over Germany in ships.
  1. In the Ricardian model, A. Two identical countries can benefit by engaging in free trade B. The country with the lower absolute cost of labor in both sectors may benefit from specialization and free trade with another country (which has higher absolute cost of labor). C. The country with the higher absolute cost ol labor in both sectors may benefit from specialization and trade with another country (which has lower absolute cost of labor) D. Both b. and c. above
  2. The source of beneficial free trade in the Ricardian world is A. Comparative advantage based on different factor endowments B. Comparative advantage based on different labor productivities C. Economies of scale in production D. Comparative advantage based on increasing returns to scale technology Question 22 to 25 pertain to the following scenario Consider two countries, Egypt and Tunisia in a Ricardian world. Each country produces two goods: food and clothing. The table below illustrates the labor hours necessary to produce one unit of each good in each country: Food Clothing Egypt 9 4 Tunisia 2 2
  3. From the table above you would conclude that A. Tunisia has absolute advantage in the production of both goods B. Egypt has comparative advantage in the production of clothing C. Tunisia has comparative advantage in the production of food D. All of the above
    1. Each country has 2000 hours of labor available. In the World Relative Supply schedule for food A. the horizontal coordinate of the step function is at 1/2 and the vertical steps are at 4/9 and 1 B. the horizontal coordinate of the step function is at 1/2 and the vertical steps are at 2.25 and 1 C. the horizontal coordinate of the step function is at 2 and the vertical steps are at 2.25 and 1 D. none of the above
    2. Suppose the world demand is such that the equilibrium international relative price of food is 3/2. In this case the relative wage of Tunisia (relative to wage in Egypt) is: A. 3 B. 2 C. 3/ D. 1
    3. The significance of moving from autarky to free trade is due to the fact that A. in free trade, the production and consumption decisions no longer need to be the same B. the real income of the inhabitants of each country rises C. the consumption possibility set for each country moves out D. all of the above

INTERNATIONAL TRADE QUIZ 2

  1. A country cannot produce a mix of products with a higher value than where A. The isovalue line intersects the PPF B. The isovalue line is tangent to the PPF C. The isovalue line is above the PPF D. The isovalue line is below the PPF
  2. The Heckscher-Ohlin theory explains comparative advantage as the result of differences in countries' A. economies of large-scale production B. relative abundance of various resources C. relative costs of labor D. research and development expenditures
  3. The Leontieff Paradox A. supported the validity of the Ricardian theory of comparative advantage B. supported the validity of the Heckscher- Ohlin model C. failed to support the validity of the Ricardian theory D. failed to support the validity of the Heckscher-Ohlin model
  4. Starling from an autarky (no-trade) situation with Heckscher-Ohlin model, if Country H is relatively labor abundant, then once trade begins A. wages and rents should rise in H B. wages and rents should fall in H C. wages should rise and rents should fall in H D. wages should fall and rents should rise in H
  5. Suppose that there are two factors, capital and land, and that the United States is relatively land endowed while the European Union is relatively capital- endowed. According to the Heckscher-Ohlin model, A. European landowners should support US-European free trade B. European capitalists should support US-European free trade C. all capitalists; in both countries should support free trade D. all landowners should support free trade
    1. The two country, multi-good model differs from the two country, two product model in that in the former A. the relative wage ratio will determine the pattern of trade (which good is exported by which country) B. one cannot determine which country will export which product given only labor productivity data C. full specialisation is less likely to hold in equilibrium D. All of the above
    2. If the price of the capital intensive product rises more than does the price of the land intensive product, then A. demand will shift away from the capital- intensive product, and its production will decrease relative to that of the and intensive product B. the production of the capital-intensive product will indeed decrease, but not for the reasons mentioned in A C. the countries exporting the capital- intensive good will lose its comparative advantage D. None of the above
    3. According to the factor endowment model of Heckscher and Ohlin, countries heavily endowed with land will
  1. Suppose that Home is a small country and it experiences growth strongly biased toward its export, cloth A. This will tend to worsen Home's terms of trade B. This will tend to improve Home's terms of trade C. This will tend to worsen Foreign's terms of trade D. This will have no effect on Foreign's terms of trade
  2. If the poor USAID recipient countries have a higher marginal propensity to consume on products that they import than does the United States, then such aid will A. worsen the U.S. terms of trade B. improve the U.S. terms of trade C. leave the world terms of trade unaffected D. worsen the terms of trade of both donor and recipient countries
  3. If PC/PF were to increase, A. world relative quantity of cloth supplied and demanded would increase B. world relative quantity of cloth supplied and demanded would decrease C. world relative quantity of cloth supplied would increase D. world relative quantity of cloth demanded would increase
  4. During the 19th Century, economic growth of the major trading countries was biased toward manufactures away from food. The less developed countries of that time were net exporters of food. From this information, we would expect to have observed A. falling terms of trade for the less developed countries B. improving (rising) terms of trade for the less developed countries C. no change at all in the terms of trade of the less developed countries D. a decrease in the relative price of food
    1. If the U S. (a large country) imposes a tariff on its imported good, this will tend to A. have no effect on terms of trade B. improve the terms of trade of all countries C. improve the terms of trade of the United States D. cause a deterioration of U.S. terms of trade
    2. If Slovenia were a large country in world trade, then if it instituted a large set of subsidies for its exports, this must A. have no effect on its terms of trade B. improve its terms of trade C. deteriorate its terms of trade D. decrease its marginal propensity to consume
    3. If, beginning from a free trade equilibrium, the terms of trade improve for a country, then it will A. increase production of its import competing good B. increase consumption of its export good C. increase the quantity of its imports D. experience an export-biased shift in its production possibility frontier
    4. A large country experiencing import- biased economic growth will tend to experience A. positive terms of trade B. deteriorating terms of trade C. improving terms of trade D. immiserizing terms of trade
    5. According to the Standard Trade Model exposited in the text, the imposition of a

tariff by Home country (Home exports cloth and Foreign exports food) A. reduces the relative supply of cloth from RS2 to RS B. increases the relative demand for cloth from RD1 to RD C. increases the relative price of cloth from (PC/PF)1 to (PC/PF) D. all of the above