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According to the Heckscher-Ohlin model, which factor determines a country's specialization in international trade?- a)Abundance of factors of production
- b)High tariffs on imports
- c)Geographic location
- d)Government regulations
Correct answer is option 'A'. Can you explain this answer?
a)
Abundance of factors of production
b)
High tariffs on imports
c)
Geographic location
d)
Government regulations
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Dev Patel answered |
The Heckscher-Ohlin model posits that a country's specialization in international trade is determined by the abundance of factors of production within that country. It suggests that countries will export goods that make intensive use of their domestically abundant factors.
What does the concept of comparative advantage focus on?- a)Producing goods at lower costs
- b)Maximizing domestic production
- c)Reducing international trade
- d)Producing goods at higher opportunity costs
Correct answer is option 'A'. Can you explain this answer?
a)
Producing goods at lower costs
b)
Maximizing domestic production
c)
Reducing international trade
d)
Producing goods at higher opportunity costs
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Dev Patel answered |
Comparative advantage focuses on producing goods and services at lower opportunity costs, which leads to more efficient and beneficial international trade.
What accounts are included in the Balance of Payments (BoP)?- a)The current account and the financial account
- b)The capital account and the financial account
- c)The current account and the capital account
- d)The trade balance and the financial account
Correct answer is option 'C'. Can you explain this answer?
a)
The current account and the financial account
b)
The capital account and the financial account
c)
The current account and the capital account
d)
The trade balance and the financial account
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Dev Patel answered |
The Balance of Payments (BoP) includes the current account, which records trade in goods, trade in services, and transfer payments, and the capital account, which records international purchases and sales of assets.
What distinguishes international trade from domestic trade?- a)International trade involves the exchange of goods and services across borders.
- b)International trade is less costly due to fewer restrictions.
- c)Domestic trade is restricted by tariffs and legal hassles.
- d)Domestic trade focuses on factors of production.
Correct answer is option 'A'. Can you explain this answer?
a)
International trade involves the exchange of goods and services across borders.
b)
International trade is less costly due to fewer restrictions.
c)
Domestic trade is restricted by tariffs and legal hassles.
d)
Domestic trade focuses on factors of production.
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Dev Patel answered |
International trade is characterized by the exchange of goods and services across national boundaries, which sets it apart from domestic trade. It often involves additional costs and complexities due to tariffs, legal systems, and distance between nations.
What is the primary factor that determines the pattern of international trade according to the Gravity model?- a)Economic sizes of nations
- b)Tariff rates
- c)Cultural factors
- d)Currency exchange rates
Correct answer is option 'A'. Can you explain this answer?
a)
Economic sizes of nations
b)
Tariff rates
c)
Cultural factors
d)
Currency exchange rates
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Dev Patel answered |
The Gravity model of trade proposes that the primary factors influencing the pattern of international trade are the economic sizes of nations and the distance between them. It suggests that larger economies tend to trade more with each other.
What is the primary objective of trade, whether domestic or international?- a)To maximize gains from trade for the parties involved.
- b)To reduce the cost of production.
- c)To restrict the flow of goods and services.
- d)To promote self-sufficiency.
Correct answer is option 'A'. Can you explain this answer?
a)
To maximize gains from trade for the parties involved.
b)
To reduce the cost of production.
c)
To restrict the flow of goods and services.
d)
To promote self-sufficiency.
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Dev Patel answered |
The primary goal of trade, both domestic and international, is to maximize the benefits or gains for the parties engaged in the exchange of goods and services. This involves taking advantage of differences in costs, resources, and expertise to improve overall economic welfare.
Which model of international trade is based on the theory of comparative advantage?- a)Ricardian model
- b)Heckscher-Ohlin model
- c)Gravity model of trade
- d)Mercantilist model
Correct answer is option 'A'. Can you explain this answer?
a)
Ricardian model
b)
Heckscher-Ohlin model
c)
Gravity model of trade
d)
Mercantilist model
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Dev Patel answered |
The Ricardian model of international trade is developed based on the theory of comparative advantage. It suggests that countries should specialize in producing goods in which they have a comparative advantage.
Which concept represents our inability to record all international transactions accurately in the Balance of Payments?- a)Errors and Omissions
- b)Autonomy Transactions
- c)Accommodating Transactions
- d)Balance of Trade
Correct answer is option 'A'. Can you explain this answer?
a)
Errors and Omissions
b)
Autonomy Transactions
c)
Accommodating Transactions
d)
Balance of Trade
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Dev Patel answered |
Errors and Omissions is a balancing item in the Balance of Payments that reflects our inability to record all international transactions accurately.
What happens when a country has a deficit in its current account?- a)It accumulates foreign exchange reserves.
- b)It runs down its foreign exchange reserves.
- c)It imposes tariffs on imports.
- d)It experiences a trade surplus.
Correct answer is option 'B'. Can you explain this answer?
a)
It accumulates foreign exchange reserves.
b)
It runs down its foreign exchange reserves.
c)
It imposes tariffs on imports.
d)
It experiences a trade surplus.
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Dev Patel answered |
When a country has a deficit in its current account (spending more abroad than it receives from sales to the rest of the world), it typically finances it by running down its foreign exchange reserves or borrowing from abroad.
What does the Balance of Trade (BoT) specifically include?- a)All international transactions
- b)Trade in goods only
- c)Trade in services only
- d)Capital account transactions
Correct answer is option 'B'. Can you explain this answer?
a)
All international transactions
b)
Trade in goods only
c)
Trade in services only
d)
Capital account transactions
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Dev Patel answered |
The Balance of Trade (BoT) specifically includes the balance of trade in goods, which represents the difference between a country's exports and imports of physical goods.
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International Business
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