The International Economy Quiz
Test your knowledge of The International Economy with these A-Level Economics questions.
This quiz consists of 16 questions. Scroll down to start the quiz!
Questions
What type of trading area is the EU?
A customs union.
Who are the UK’s main trading partners?
The EU and The USA.
State the two ways countries can pursue their goals of development.
Import substitution, export promotion.
When does a country have comparative advantage?
When it can produce goods more effectively than other countries produce the same goods.
What does the model of comparative advantage fail to take into consideration?
Transport costs.
State three costs of international trade.
It can lead to diseconomies of scale.
Transport costs are not included in comparative advantage model.
It can damage infant industries.
Countries can become dependent on one industry therefore increasing their vulnerability to changes in global markets.
What is protectionism?
Where the Government shields domestic producers by shielding them from foreign competition.
Which of the following is NOT a method of protectionism – tariffs, quotas, embargoes, direct taxation?
Direct taxation.
What is direct protectionism?
This is the use of tariffs on imported goods.
What is recorded on the current account?
All the trade in goods and services for a country’s economy.
What is included on the capital account?
All capital inflows and outflows from a country including: financial investment, direct investment and currency trading.
When do payment deficits occur?
When more is being imported than exported.
How are floating exchange rates determined?
By the interaction of demand and supply for a country’s currency.
What is an advantage of floating exchange rates?
Currency’s value is determined by market forces, No need for government / central bank intervention.
State two disadvantages of fixed exchange rates.
They need government intervention, can cause macro-economic problems, may reduce the stability of the domestic economy.
Explain the term increased price transparency.
It means businesses and consumers will be able to compare relative prices easily between countries.
Category
