41. Which of the following terms best represents a situation in which a government does not
attempt to influence through quotas or duties what its citizens can buy from another country, or
what they can produce and sell to another country?
42. Sentoria is an island nation in the Pacific ocean. It’s geographical location is
advantageous since it has access to a variety of aquatic life forms and also a number of fresh
water sources that provide for fisheries. The lack of arable land drives local demand for seafood.
The competition in the domestic fishing industry is fierce and enables Sentoria to be one of the
major exporters of seafood. Which of the following theories of international trade best explains
Sentoria’s dominance as an exporter of seafood?
43. Which of the following factors is taken into consideration by David Ricardo’s theory of
comparative advantage in order to explain the pattern of international trade?
44. Salcia is a country that depends heavily on domestic products. The
Salcian government decides on the products that can be imported and ensures that any product
that can be produced at home is not imported. A major part of Salcia’s trade is concentrated on
exporting agricultural produce and textiles. Which of the following influences Salcia’s approach to
international trade?
45. The argument for unrestricted free trade is that both import controls and export
incentives:
46. _____ advocated that countries should simultaneously encourage exports and discourage
imports.
47. Which of the following is in a country’s best interests according to the main tenet of
mercantilism?
48. Considered to be the first theory of international trade, the principal assertion of
mercantilism is that:
49. Which of the following is consistent with the central beliefs of mercantilism?
50. The Republic of Argonia, owing to it’s vast resources of arable land and fresh water, is an
agrarian nation. It exports agricultural products and in turn imports products that it does not
produce such as oil, machinery, computers, and electronic devices. The result is that it spends
more on imports than what it gains from exports. Which of the following theories prohibits such
international trade?
51. An inconsistency in the mercantilist doctrine, as pointed out by David Hume, is that:
52. The flaw with mercantilism was that it viewed trade as a:
53. What is a zero-sum game?
54. Neo-mercantilists equate political power with economic power and economic power with
_____.
55. According to Adam Smith and David Ricardo, trade is _____.
56. In his 1776 landmark book The Wealth of Nations, Adam Smith attacked _____ by
criticizing its assumption that trade is a zero-sum game.
57. A country is said to have a(n) _____ in the production of a product when it is more
efficient than any other country in producing that product.
58. According to Adam Smith, countries should specialize in the production of goods for
which they have an absolute advantage and then:
59. Cadmia and Rhodia specialize in the production of textiles and agricultural
products respectively. They are the best at their respective specializations. Cadmia trades
textiles with Rhodia in exchange for agricultural products. Which of the following is illustrated by
this form of trade between Cadmia and Rhodia?
60. Which of the following is a correct inference from Adam Smith’s theory of absolute
advantage?