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Question 1

What is trade policy?

Answer 1

A country’s rules, regulations, and practices that govern international trade.

Question 2

What is a tariff?

Answer 2

A tax imposed on imported goods. Mnemonic: ‘T for Tax’.

Question 3

What are Non-Tariff Barriers (NTBs)?

Answer 3

Rules or standards that restrict trade without tariffs, like quotas or regulations.

Question 4

What is the difference between free trade and protectionism?

Answer 4

Free trade means low or no trade barriers; protectionism involves high tariffs or NTBs to protect domestic industries.

Question 5

What is comparative advantage?

Answer 5

When countries specialize in goods they produce efficiently and trade for others. Mnemonic: ‘Compare and Trade’.

Question 6

Example of protectionism

Answer 6

U.S. tariffs on steel to protect domestic industry.

Question 7

Example of liberalization

Answer 7

EU removing tariffs on Vietnamese coffee.

Question 8

What does the WTO do?

Answer 8

Sets global trade rules and settles disputes. Mnemonic: ‘We Trade Openly’.

Question 9

What is the function of UNCTAD?

Answer 9

Focuses on trade & development in poorer countries. Mnemonic: ‘UN Helps the Least Developed’.

Question 10

What is the OECD?

Answer 10

A group offering economic analysis and advice for developed countries. Mnemonic: ‘Overseeing Economic Cooperation for the Developed’.

Question 11

What is the role of the IMF?

Answer 11

Stabilizes economies via loans and advice. Mnemonic: ‘IMF = Stabilize’.

Question 12

What does the World Bank do?

Answer 12

Finances development projects, especially infrastructure. Mnemonic: ‘Bank = Build’.

Question 13

What is APEC?

Answer 13

A regional trade bloc in the Asia-Pacific that promotes economic integration.

Question 14

What is MFN status under the WTO?

Answer 14

A rule that requires countries to treat all trading partners equally.

Question 15

What is trade facilitation?

Answer 15

Efforts to simplify customs and logistics to make trade easier.

Question 16

What is international trade?

Answer 16

The exchange of goods, services, and capital across borders.

Question 17

Why do countries trade? (mnemonic: SPICE)

Answer 17

Specialization, Productivity (increased), Interdependence, Consumer choice, Economic growth.

Question 18

Explain Comparative Advantage.

Answer 18

Countries specialize in producing goods/services at a lower opportunity cost, leading to greater overall consumption through trade.

Question 19

Explain Specialization.

Answer 19

Countries focus on specific industries, becoming highly skilled and efficient, leading to economies of scale.

Question 20

Explain Increased Efficiency (in relation to trade).

Answer 20

Competition from international markets pushes domestic industries to innovate and improve.

Question 21

Explain Consumer Benefits (in relation to trade).

Answer 21

Greater variety of goods/services, often at more competitive prices.

Question 22

Explain Economic Growth (in relation to trade).

Answer 22

Access to larger markets, new business opportunities, job creation, and access to cheaper inputs/technologies.

Question 23

What is the economic principle that explains why countries specialize and trade even if one is better at producing everything?

Answer 23

Comparative Advantage – countries benefit by specializing in what they produce at the lowest opportunity cost.

Question 24

How does trade help companies lower production costs?

Answer 24

By allowing access to cheaper inputs and labor through imports.

Question 25

What does trade allow consumers to enjoy more of?

Answer 25

A greater variety of goods and services, including those not produced locally.

Question 26

How does selling abroad help a country's businesses grow?

Answer 26

By accessing larger markets, increasing revenues and employment.

Question 27

How does trade contribute to lower per-unit production costs?

Answer 27

Through economies of scale – producing more for larger markets reduces average costs.

Question 28

What kind of benefits does trade bring beyond goods—especially for developing countries?

Answer 28

Technology and knowledge transfer from more advanced economies.

Question 29

How can trade reduce a country’s economic risk?

Answer 29

By diversifying trade partners, reducing reliance on any single market or sector.

Question 30

What is one geopolitical benefit of international trade?

Answer 30

It strengthens diplomatic ties and creates interdependence that can reduce conflict.

Question 31

What is the mission of the World Bank?

Answer 31

To support long-term economic development. Mnemonic: 'Bank Builds'.

Question 32

What is the mission of the IMF?

Answer 32

To ensure short-term macroeconomic stability. Mnemonic: 'IMF = Instant Money Fix'.

Question 33

Who does the World Bank primarily help?

Answer 33

Middle- and low-income countries with development loans.

Question 34

Who does the IMF primarily help?

Answer 34

Countries facing balance-of-payment crises.

Question 35

What are structural adjustment programs (SAPs)?

Answer 35

Economic reform conditions tied to IMF loans.

Question 36

What is IDA?

Answer 36

International Development Association: provides low/no-interest loans to poorest countries (World Bank).

Question 37

What is the IMF quota system?

Answer 37

A funding model where member contributions determine voting power and loan access.

Question 38

Give an example of a World Bank intervention.

Answer 38

Rebuilding infrastructure in war-affected countries like Ukraine.

Question 39

Give an example of an IMF intervention.

Answer 39

Emergency lending to Argentina in 2018 to stabilize its currency.