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CA Foundation International Trade — practice questions — page 2

Explore 60 free International Trade questions in CA Foundation Business Economics. Open each question or exercise to read its content, reference answers and available explanation.

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International Trade questions and exercises with answers

Showing questions 31–60 of 60.

What does a tariff do to the domestic price of the imported good?Read the answer and worked solution →Economists mostly conclude that tariffs have what effect on welfare?Read the answer and worked solution →When a tariff is imposed, what happens to the surplus of domestic consumers?Read the answer and worked solution →A tariff protects domestic producers. What happens to their surplus?Read the answer and worked solution →After a tariff, overall welfare of the importing country:Read the answer and worked solution →The infant industry argument says new industries need what?Read the answer and worked solution →Why do most economists reject tariffs as a cure for unemployment?Read the answer and worked solution →For vital defence industries, what do economists suggest instead of tariffs?Read the answer and worked solution →Autarky refers to which desire?Read the answer and worked solution →What is an optimal tariff designed to do?Read the answer and worked solution →Why is an optimal tariff a beggar thy neighbor policy?Read the answer and worked solution →When one country imposes high tariffs, partners often respond with what?Read the answer and worked solution →Environmental dumping is when firms gain an unfair edge from what?Read the answer and worked solution →What is the balance of payments?Read the answer and worked solution →In balance of payments accounting, how are receipts from abroad recorded?Read the answer and worked solution →How are payments made to foreigners shown in the balance of payments accounts?Read the answer and worked solution →Which of these is a component of the current account?Read the answer and worked solution →The balance of trade equals what?Read the answer and worked solution →The capital account in the broad sense records what?Read the answer and worked solution →The reserve account records what?Read the answer and worked solution →Under the broad BoP identity, a current account surplus is balanced by what?Read the answer and worked solution →A visible trade deficit means a nation is doing what?Read the answer and worked solution →If outflows exceed inflows, what pressure does the country's currency face?Read the answer and worked solution →A balance of payments crisis occurs when a nation cannot do what?Read the answer and worked solution →Currency appreciation does what to exports and imports?Read the answer and worked solution →A fall in a currency's value makes imports what for a country's citizens?Read the answer and worked solution →A current account surplus is equivalent to the excess of what?Read the answer and worked solution →After Bretton Woods ended, which currency remained the principal de facto reserve?Read the answer and worked solution →A country selling more than it imports sees what happen to demand for its currency?Read the answer and worked solution →Which view blames a global savings glut for BoP imbalances, argued in a 2005 paper?Read the answer and worked solution →

Worked practice questions

What does a tariff do to the domestic price of the imported good?

  1. Lowers it below the world price
  2. Raises it above the world price
  3. Keeps it fixed at zero
  4. Makes it equal to export price
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Correct answer: B. Raises it above the world price

The tax makes the imported good dearer, so the domestic price rises above the world price.

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Economists mostly conclude that tariffs have what effect on welfare?

  1. Raise it for everyone
  2. Leave it quite unchanged
  3. Reduce growth and welfare
  4. Raise growth in poor lands
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Correct answer: C. Reduce growth and welfare

There is near unanimous agreement that tariffs hurt growth and welfare while freer trade helps them.

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When a tariff is imposed, what happens to the surplus of domestic consumers?

  1. It rises as imports rise
  2. It stays exactly unchanged
  3. It turns into tax revenue
  4. It shrinks as prices rise
Show answer and solution

Correct answer: D. It shrinks as prices rise

Higher prices and lower quantities demanded reduce consumer surplus when a tariff is levied.

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More Business Economics topics

Price-Output Determination under Different Market FormsTheory of Consumer BehaviourSupplyTheory of ProductionProduction And CostPublic FinanceBusiness CyclesBasic Problems of an Economy and Role of Price Mechanism