Trade Policy and Agreements Quiz

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Questions and Answers

What is the main reason countries trade according to the text?

To increase their military power

To achieve self-sufficiency

Due to different technologies and factor endowments (correct)

To lower their GDP

During which period was considered the 'Golden Age of trade'?

1950-1980

1870-1914 (correct)

1914-1960

1960-Present

What are some of the trade policy instruments mentioned in the text besides tariffs and quotas?

Sanctions

Immigration policies

Trade embargoes

Antidumping and countervailing duties (correct)

What major organization is highlighted as crucial in regulating the world trading system?

WTO Signup and view all the answers

What technology was widely adopted in the 1970s and 80s that led to a fall in transport costs?

Contenerization Signup and view all the answers

Which two countries experienced huge increases in exports according to the text?

India and China Signup and view all the answers

What event stopped the increase in trade due to protectionist measures?

Great Depression and end of WWII Signup and view all the answers

Since when has the share of trade as a percentage of GDP been increasing according to the text?

$1960s$ Signup and view all the answers

'Golden Age of trade' was characterized by:

'Both a & b' Signup and view all the answers

'Rise of global value chains' is associated with which period?

From 1960 to present Signup and view all the answers

What is the formula for calculating total merchandise trade for country A in 2010?

Total merchandise trade = Exports + Imports Signup and view all the answers

Which factor is NOT considered when calculating the growth in trade from 1960 to 2010?

Trade liberalization policies Signup and view all the answers

What core principle of the WTO ensures non-discriminatory trade practices among member nations?

Most-Favored Nation Principle Signup and view all the answers

What is an example of a protectionist trade policy?

Import tariffs and export taxes Signup and view all the answers

What event occurred in 2018 that had an impact on the world trading system according to the text?

US blocked appointment of judges to WTO Signup and view all the answers

Which trade policy institution was founded in 1995 to regulate and promote free trade?

World Trade Organization (WTO) Signup and view all the answers

What did AUS and NZ do in 2023 according to the text?

Reduced tariffs on hundreds of goods Signup and view all the answers

What is the purpose of a countervailing duty investigation according to the text?

To protect domestic industries from unfair foreign competition Signup and view all the answers

'Temporary trade barriers' mentioned in the text include all of the following EXCEPT:

'Unilateral liberalization' Signup and view all the answers

'Most-favored nation (MFN)' principle of the WTO ensures that:

'All WTO member countries extend their best trade terms to one another' Signup and view all the answers

Study Notes

Reasons for Trade and Trade Policy

Countries trade primarily to enhance economic efficiency and improve access to goods and services.
'Golden Age of trade' refers to the period post-World War II, specifically from 1945 to the early 1970s.
Trade policy instruments include subsidies, anti-dumping measures, and voluntary export restraints, in addition to tariffs and quotas.

Organizations and Technology

The World Trade Organization (WTO) plays a crucial role in regulating the global trading system.
The adoption of containerization technology in the 1970s and 80s significantly reduced transport costs.

Export Increases and Trade Barriers

China and Germany saw substantial increases in their export volumes during recent decades.
The 2008 financial crisis triggered protectionist measures that halted the growth of international trade.

The share of trade as a percentage of GDP has been increasing since the 1980s.
The emergence of global value chains is linked to the period of globalization that expanded in the 1990s.

Trade Calculations and Core Principles

Total merchandise trade for country A in 2010 can be calculated by summing exports and imports for that year.
Growth in trade from 1960 to 2010 does not consider population growth as a factor.

WTO Principles and Protectionism

The core principle of the WTO that ensures non-discriminatory trade practices is known as Most-Favored Nation (MFN).
An example of a protectionist trade policy is the imposition of tariffs on foreign goods.

Recent Developments

In 2018, the U.S.-China trade war escalated, affecting global trade dynamics significantly.
The WTO was established in 1995 to regulate and promote free trade among nations.
In 2023, Australia and New Zealand engaged in an agreement to enhance trade cooperation.

Investigations and Temporary Barriers

Countervailing duty investigations aim to address unfair subsidies and protect domestic industries.
'Temporary trade barriers' do not include standard tariffs; they comprise safeguards and anti-dumping duties.

Most-Favored Nation Principle

The MFN principle ensures that if a country offers favorable trading terms to one member, it must extend the same terms to all WTO members.

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Description

Test your knowledge on trade policy instruments, trade agreements, WTO, and FTA. Understand the concept of comparative advantage and how trade affects different sectors of the economy.