International Trade
Economics · 50 practice questions
Meaning and basis for international trade (absolute and comparative costs); balance of trade and balance of payments (problems, corrective measures); composition and direction of Nigeria's foreign trade; exchange rate — meaning, types and determination.
- Examine the basis for international trade and differentiate between absolute and comparative advantage.
- Distinguish between balance of trade and balance of payments and their corrective measures.
- Examine the composition and direction of Nigeria's foreign trade.
- Identify types of exchange rates and examine how they are determined.
Try a few questions
- Practice question 1
A country experiencing a persistent balance of payments deficit may correct it by
- A.revaluing its currency upward
- B.increasing imports further
- C.devaluing its currency to make exports cheaper and imports dearer
- D.reducing exports deliberately
Show the answer
C. devaluing its currency to make exports cheaper and imports dearer
Devaluation is a common corrective measure for deficits.
- Practice question 2
Combining the visible surplus of ₦120bn and the invisible deficit of ₦30bn, the current account balance is a
- A.deficit of ₦90bn
- B.surplus of ₦150bn
- C.surplus of ₦90bn
- D.deficit of ₦30bn
Show the answer
C. surplus of ₦90bn
Current account = 120 + (−30) = 90bn surplus.
- Practice question 3
The balance of trade refers to the difference between a country's
- A.total government revenue and expenditure
- B.population growth and food supply
- C.interest rates and inflation rates
- D.visible exports and visible imports
Show the answer
D. visible exports and visible imports
Balance of trade covers only visible (merchandise) exports and imports.
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