INTERNATIONAL TRADE

FINAL EXAMINATION

Name:___________________________________ Date: _______________

Course/ Sec./ Subject:_______________________ Score:_______________
Instructions:
1. Examination is composed of 50 questions, multiple choice.
3. A separate answer sheet will be provided. ALL FINAL ANSWERS MUST BE REFLECTED ON THE ANSWER SHEET GIVEN.
2. Shade COMPLETELY the bubble/ circle that correspond to the correct answer.
3. Use only a BLACK BALLPEN.
4. STRICTLY NO ERASURES.
I. Multiple Choice
1. Occurs when the formation of a preferential trading agreement leads to replacement of high-cost
domestic production by low cost imports from other members.
A. Trade Diversion C. Customs Union
B. Trade Creation D. Trade Bloc
2. Occurs when the formation of a preferential trading agreement leads to the replacement of low-cost
imports from non-members with higher cost imports from member nations.
A. Trade Diversion C. Customs Union
B. Trade Creation D. Trade Bloc
3. A trade pact between countries that reduces tariffs for certain products to the countries who
sign the agreement. While the tariffs are not necessarily eliminated, they are lower than
countries not party to the agreements.
A. Trade Bloc C. Customs Union
B. Regional Trading Agreement D. Preferential Trading Agreement
4. Is a type of intergovernmental agreement, often part of a regional intergovernmental
organization, where regional barriers to trade are reduced or eliminated among the participating
states.
A. Trade Bloc C. Customs Union
B. Regional Trading Agreement D. Preferential Trading Agreement
5. Allows free-trade among members, but each member can have its own trade policy towards
non-member countries.
A. Customs Union C. Free Trade Area
B. Common Market D. Trade Bloc
6. Allows free trade among members and requires a common external trade policy towards
non-member countries.
A. Customs Union C. Free Trade Area
B. Common Market D. Trade Bloc
7. Refers to a customs union with free factor movements among members.
A. Customs Union C. Free Trade Area
B. Common Market D. Trade Bloc
8. Term used to describe how different aspects between countries are integrated.
A. Economic Integration C. Free Trade Area
B. Common Market D. Trade Bloc
9. In this type of trade bloc, a designated group of countries that have agreed to eliminate tariffs,
quotas, and preferences on most goods and services traded between them.
A. Customs Union C. Free Trade
B. Common Market D. Trade Bloc
10. Is member- driven with decisions taken by General agreement among all member of
government and it deals with the rules of trade between nations at a global or near-global level.
A. World Trade Organization C. GATT
B. NAFTA D. ASEAN
II. Identify whether the following belongs to Mercantilism, Absolute Advantage,
Comparative Advantage, Heckscher- Ohlin Theory.

1. Trade goods with lowest opportunity cost

2. Trade goods of Specialization
3. Trade goods that uses the least amount of Labor and Capital
4. Gold and Silver Reserves
5. David Ricardo
6. Adam Smith
7. Discourage importation
8. Encourage exportation
9. Mutually beneficial Trade
10. Gain trade benefits at the expense of other nation.

III. Enumerate the following:

1. Instruments of Trade Policy

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2. Principle of WTO
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3. Six Stages of Economic Integration

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III. True Or False
____________________1. The WTO came into being on January 1, 1995.
____________________2. A Trade Bloc can’t be a stand-alone agreement.
____________________3. A regional trade agreement is a trading agreement which gives preferential access
to certain products from the participating countries.
____________________4. The NAFTA creates a free trade arena
____________________5. One major function of WTO is settling trade disputes
____________________6. Trade blocs creates barriers to trade.
____________________7. One of the reason why a country imposes tariffs is to increase their revenue.
____________________8. The most integrated economy today is the European Union.
____________________9. World Trade Organization does not protect intellectual property rights.
____________________10. Free trade is the main goal of WTO.

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