International Economics Unit 2 Set 2
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This set of International Economics Multiple Choice Questions & Answers (MCQs) focuses on International Economics Unit 2 Set 2
Q1 | A trade-creating customs union is one where:
- lower-cost imports from outside the customs union are replaced by higher-cost imports from a union member
- some domestic production in a member nation is replaced by lower-cost imports from another member nation
- trade among members increases but trade with nonmembers decreases
- trade among members decreases while trade with nonmembers increases
Q2 | A trade-diverting customs union:
- increases trade among union members and with nonmember nations
- reduces trade among union members and with nonmember nations
- increases trade among members but reduces trade with non-members
- reduces trade among union members but increases it with nonmembers
Q3 | A trade-diverting customs union results in:
- trade diversion only
- trade creation only
- both trade creation and trade diversion
- we cannot say
Q4 | A trade-diverting customs union:
- increases the welfare of member and nonmember nations
- reduces the welfare of member and nonmember nations
- increases the welfare of member nations but reduces that of nonmembers
- reduces the welfare of nonmembers and may increase or reduce that of members
Q5 | A tariff:
- Increases the volume of trade
- Reduces the volume of trade
- Has no effect on volume of trade
- (a) and (c) of above
Q6 | A tariff is:
- A restriction on the number of export firms
- Limit on the amount of imported goods
- Tax and imports
- (b) and (c) of above
Q7 | What would encourage trade between two countries:
- Different tax system
- Frontier checks
- National currencies
- Reduced tariffs
Q8 | In a free trade world in which no restrictions exist, international trade will lead to:
- Reduced real living standard
- Decreased efficiency
- Increased efficiency
- Reduced real GDP
Q9 | Govt. policy about exports and imports is called:
- Monetary policy
- Fiscal policy
- Commercial policy
- Finance policy
Q10 | International trade and domestic trade differ because of:
- Trade restrictions
- Immobility of factors
- Different government policies
- All of the above
Q11 | What would encourage trade between two countries?
- Different tax system
- Quality control
- Reduced tariffs
- Fixing import quota
Q12 | In the European Union:
- All member countries have a single exchange rate
- All members set their own tariffs
- There is a common tariff against non-members
- All taxes are set the same
Q13 | On the 1st January 1958, six countries signed the treaty establishing the European Economic Community (EEC), in turn establishing the foundations for the European Union. In which European capital was it signed in from which it also takes its name?
- Athens
- Brussels
- Rome
- Amsterdam
Q14 | The European Union has grown to be one of the world's largest trading blocs and markets. What is the approximate size of the population of the EU?
- 500 million people
- 292 million people
- 1.3 billion people
- 127 million people
Q15 | Which two institutions decide the Union's budget?
- The Council of Ministers and the European Commission
- The European Parliament and the European Central Bank
- The Council of Ministers and the European Parliament
- The European Central Bank and the European Commission
Q16 | The European Union is one powerful global economic bloc. ASEAN is best described as being:
- A free trade zone
- A confederation of states
- A customs union
- A monetary union
Q17 | Which of the following EU countries are sometimes referred to as the PIGS countries?
- Portugal, Ireland. Greece, Spain
- Poland, Italy, Germany, Slovenia
- Poland, Ireland, Greece, Switzerland
- Portugal, Italy, Greece, Slovenia
Q18 | What is the main reason behind the introduction of the euro?
- It promotes economic sovereignty
- It can protect business trading from currency fluctuations
- To allow the free movement of people
- It was a branding exercise
Q19 | Which of the following are exclusive EU competencies in relation to Member States?
- Conservation of marine biological resources (common fisheries policies), common market policies, the customs union and monetary policy for Member States belonging to the Eurozone.
- The customs union, the environment, agriculture and consumer protection.
- Monetary policy for Member states belonging to the Eurozone, tourism, transport and industrial policy, EU regional Policy.
- The customs union, common commercial (trade) policies, education and culture.
Q20 | A common or single market will have all of the following features except:
- No internal trade barriers
- Common external tariff
- Factor and Asset mobility
- A common currency
Q21 | Which of the options below is the only characteristic of a free trade area?
- A common currency
- Common economic policy
- No internal trade barriers
- Common external tariff
Q22 | On the balance-of-payments statements, merchandise imports are classified in the:
- Current account
- Capital account
- Unilateral transfer account
- Official settlements account
Q23 | The balance of international indebtedness is a record of a country’s international:
- Investment position over a period of time
- Investment position at a fixed point in time
- Trade position over a period of time
- Trade position at a fixed point in time
Q24 | Which balance-of-payments item does not directly enter into the calculation of the U.S.gross domestic product?
- Merchandise imports
- Shipping and transportation receipts
- Direct foreign investment
- Service exports
Q25 | Which of the following is considered a capital inflow?
- A sale of U.S. financial assets to a foreign buyer
- A loan from a U.S. bank to a foreign borrower
- A purchase of foreign financial assets by a U.S. buyer
- A U.S. citizen’s repayment of a loan from a foreign bank