LEA Reviewer - International Trade Exam

Question of
Ultimate consumption of the division of labor
- specialization
- trade
- self-sufficiency
- autarky
Question of
Says that a country tends to produce for an export those products, which it can be produced most cheaply and to import those products, which other countries can produce most cheaply.
- comparative advantage
- specialization
- trade
- barter
Question of
This represents the value of domestic resources spend in saving or earning a unit of foreign exchange as a proportion of its actual exchange rate
- domestic resources
- private sector cost
- private profitability
- social profitability
Question of
The Domestic Cost Ratio (DRC) is divided with __ to come up with the resource ratio (RCR)
- actual exchange rate
- shadow exchange rate
- domestic currency value
- foreign currency value
Question of
If the RCR coefficient is less than 1 then the economic activity has a
- comparative advantage
- comparative disadvantage
- neutral advantage/disadvantage
- cannot tell
Question of
This means that if the crop is being currently imported like yellow corn then
- the country can earn foreign exchange if it will be exported abroad
- the country can save foreign exchange by producing the product domestically
- the country has no choice but to sell the products to ASEAN countries
- the country has to join WTO to be competitive
Question of
On the other hand if the DRC coefficient is greater than one, it is better for the country to
- export yellow corn
- import yellow corn
- import other feeds
- increase tariff on corn
Question of
Tariff is imposed on
- an imported commodity
- an exported commodity
- persons
- in finished goods only
Question of
Once tariff is imposed the price of the imported commodities will
- decrease
- increase
- remain the same
- be uncertain
Question of
Shows the difference in final price of the finished goods before and after imposition
- nominal protection
- effective protection rate
- implicit tariff
- none of the choices
Question of
Shows by how much the value added in the industry can exceed the value added in the absence of protection
- nominal protection
- effective protection
- implicit tariff
- none of the choices
Question of
The effective protection rate (ECR) includes the tariff on
- a. finished goods
- b. intermediate inputs
- c. luxury products
- d. both a and b
Question of
Measures the rates by which domestic price of an input or output face by producers deviates from the world or border price
- nominal protection
- effective protection rate
- implicit tariff
- government protection
Question of
The replacement of foreign production with foreign production
- import substitution
- transfer effect
- protective effect
- revenue effect
Question of
The additional economic rent paid to the pre-existing domestic producers plus the rent paid to new producers above their supply price
- import substitution
- transfer effect
- consumption effect
- revenue effect
Question of
The size of the protective effect is determined by
- elasticity of supply
- elasticity of demand
- income elasticity of demand
- cross price elasticity of demand
Question of
A tariff designed for protection must provide rates of duties high enough to achieve this objective
- the encouragement of additional domestic production which could not take place because of prevailing cost disadvantages
- create a home market for the product
- increase labor share to national income
- increase employment
Question of
The most valid reason why a government imposes tariff for protection
- protection for industries
- creation of home market
- raise government
- protection of infant industries
Question of
A direct source of monopoly profit
- non-tariff barriers
- quota
- tariff
- dumping
Question of
The Philippines tariff structure at the beginning of 1980 indicated that
- export were penalized, both a manufacturing sector and other sectors esp. agriculture
- Agriculture receive the highest level of protection
- export industries enjoyed the protection system
- backward integration of the industrial structure was encourage
Question of
Country or group of countries with the highest non-tariff barriers imposed on the Philippines
- Japan
- US
- Taiwan
- European or EU countries
Question of
The case for the protection of infant industries rests on the assumption of
- efficiency
- inability
- latent comparative advantage
- revenue gain
Question of
Consists of a group of countries that have abolished al tariff among them, but maintain their individual tariffs vis-à-vis the outside world.
- free area trade
- customs union
- common market
- economic union
Question of
An example of free trade area
- AFTA
- EEC
- WTO
- EU
Question of
The European Union is an example of
- free trade area
- customs union
- common market
- economic union
Question of
The summary of all economic transactions between the residents of one country vis-à-vis the rest of the world
- balance of payments
- balance of trade
- summary of trade
- WB-IMF accounting
Question of
Final adjustments made by authorities to settle imbalances in the balance of payments
- compensatory financing
- official statements
- devaluation
- borrowing
Question of
The account tells whether the country had earned more than it had paid out
- current account
- capital account
- merchandise trade account
- official statements
Question of
Otherwise known as “invisibles” in the BOP account
- merchandise trade
- non-merchandise trade
- capital account
- official account
Question of
An example of an invisible trade
- OFW remittances
- Loans and borrowing
- Foreign investments
- Export and import
Question of
As such there are ___ components in the BOP (Balance of Payments) account
- two
- three
- four
- five
Question of
If there is a persistent BOP deficit, what usually takes place to correct the imbalance?
- a. exchange rate depreciation
- b. exchange rate appreciation
- c. import and foreign exchange control
- d. both a and c
Question of
Depreciation is an expenditure switching approach, thus it has to be accompanied
- expenditure reducing
- expenditure enhancing
- export promotion
- nothing will be effective
Question of
With depreciation
- a. exports will become cheap in the eyes of the foreign buyers
- b. export will become expensive
- c. imports will become expensive domestically
- d. all of the above
- e. both a and c
Question of
System of cultivation using large amounts of labor and capital relative to land area
- agriculture
- extensive agriculture
- intensive agriculture
- farming
Question of
System of cultivation using small amounts of labor and capital in relation to the area of the land being farmed
- agriculture
- extensive agriculture
- intensive agriculture
- farming
Question of
This implies that under this system of cultivation there are smaller land areas available
- agriculture
- extensive agriculture
- intensive agriculture
- farming
Question of
The steady process by which the productive capacity of the economy is increased over time to bring about rising levels of national income
- economic growth
- economic development
- economic efficiency
- economic good
Question of
The process of improving the quality of all human lives
- economic growth
- economic development
- economic efficiency
- economic good
Question of
The important aspect of development is
- raising people’s living levels i.e. income and consumption level of food, medical services, education through relevant economic processes
- creating conditions conducive to the growth of people’s self esteem through the establishment of social, political and economic systems that promote human dignity and respect
- increasing people’s freedom to choose by enlarging the range of their choices e.g. increasing varieties of consumer goods and services
- all of the choices

LEA Reviewer – International Trade Exam

Ultimate consumption of the division of labor

Says that a country tends to produce for an export those products, which it can be produced most cheaply and to import those products, which other countries can produce most cheaply.

This represents the value of domestic resources spend in saving or earning a unit of foreign exchange as a proportion of its actual exchange rate

The Domestic Cost Ratio (DRC) is divided with __ to come up with the resource ratio (RCR)

If the RCR coefficient is less than 1 then the economic activity has a

This means that if the crop is being currently imported like yellow corn then

On the other hand if the DRC coefficient is greater than one, it is better for the country to

Tariff is imposed on

Once tariff is imposed the price of the imported commodities will

Shows the difference in final price of the finished goods before and after imposition

Shows by how much the value added in the industry can exceed the value added in the absence of protection

The effective protection rate (ECR) includes the tariff on

Measures the rates by which domestic price of an input or output face by producers deviates from the world or border price

The replacement of foreign production with foreign production

The additional economic rent paid to the pre-existing domestic producers plus the rent paid to new producers above their supply price

The size of the protective effect is determined by

A tariff designed for protection must provide rates of duties high enough to achieve this objective

The most valid reason why a government imposes tariff for protection

A direct source of monopoly profit

The Philippines tariff structure at the beginning of 1980 indicated that

Country or group of countries with the highest non-tariff barriers imposed on the Philippines

The case for the protection of infant industries rests on the assumption of

Consists of a group of countries that have abolished al tariff among them, but maintain their individual tariffs vis-à-vis the outside world.

An example of free trade area

The European Union is an example of

The summary of all economic transactions between the residents of one country vis-à-vis the rest of the world

Final adjustments made by authorities to settle imbalances in the balance of payments

The account tells whether the country had earned more than it had paid out

Otherwise known as “invisibles” in the BOP account

An example of an invisible trade

As such there are ___ components in the BOP (Balance of Payments) account

If there is a persistent BOP deficit, what usually takes place to correct the imbalance?

Depreciation is an expenditure switching approach, thus it has to be accompanied

With depreciation

System of cultivation using large amounts of labor and capital relative to land area

System of cultivation using small amounts of labor and capital in relation to the area of the land being farmed

This implies that under this system of cultivation there are smaller land areas available

The steady process by which the productive capacity of the economy is increased over time to bring about rising levels of national income

The process of improving the quality of all human lives

The important aspect of development is

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