One advantage of International trade is that
Prices of goods become stable
Countries become self-sufficient
Goods consumed are produced at a very high cost
It makes possible the consumption of variety of goods
Correct answer is D
International Trade promotes economic growth, efficiency, technological progress, and what ultimately matters the most, consumer welfare. By lowering prices and increasing product variety available to consumers, trade especially benefits middle- and lower-income households.
Nations engage in international trade because of difference in?
Absolute cost
Comparative cost
Fixed cost
Variable cost
Correct answer is B
The principle of comparative cost states that;
international trade takes place between two countries when the ratios of comparative cost of producing goods differ, and each country would specialise in producing that commodity in which it has a comparative advantage.
Comparative cost advantage is when a country produces a good or service for a lower opportunity cost than other countries.
Which of the following is not a measure for reducing balance of payments deficits?
Export drive
Reducing tariffs
Adding to export goods
Increasing local production
Correct answer is B
Tariffs are duties (taxes) imposed on imports. When tariffs are imposed, the prices of imports would increase to the extent of tariff. The increased prices will reduced the demand for imported goods and at the same time induce domestic producers to produce more of import substitutes. Non-essential imports can be drastically reduced by imposing a very high rate of tariff. Therefor, reducing tariffs will further increase balance of payment deficits.
Which of the following measure can be adopted to stabilize the external value of the local currency?
Reduce the volume of export
Increase the demand for imports
Increase domestic money supply
Reduce the demand for imports
Correct answer is D
A rise in imports has a negative effect on the balance of trade, that is, it will tend to increase the trade deficit or reduce the trade surplus.
The poorer the country, the larger the percentage of labour force engaged in?
Agricultural
Mining
Trading
Manufacturing
Correct answer is A
No explanation has been provided for this answer.