International Economics Set 1
On This Page
This set of International Economics Multiple Choice Questions & Answers (MCQs) focuses on International Economics Set 1
Q1 | Trade In differentiated products refers to
- intra industry trade
- inter industry trade
- trade based on economies of scale
- non of the above
Q2 | The terms of trade of developing countries have a secular tendency to
- improve
- deteriorate
- first improve and then deteriorate
- remain the same
Q3 | The opportunity cost theory assumes that
- labour is the only factor of production
- the price or the cost of a commodity can be determined by the labour content in it
- labour is homogeneous
- non of the above
Q4 | If a nation gains from trade its consumption point is
- on the production possibility frontier (ppc
- inside the ppc
- above the ppc
- any of the above
Q5 | Given below is a table whowing the maximum amount of wheat and cloth that the UK and U S could produce if they fully utilize all the factors of production with the best technology available indicate the comparative advantage of U K and U S. U K U S Bushels of wheat 50 120 Meters of Cloth 150 80
- us have comparative advantage in cloth and u k have comparative advantage in wheat
- u k have comparative advantage in cloth and us have comparative advantage in wheat
- us have comparative advantage in cloth and wheat
- uk have comparative advantage in cloth wheat
Q6 | If a nations terms of trade is ½ its trade partners terms of trade is
- 4
- 2
- 1
- ½
Q7 | The H O theory postulates that as a result of trade the differences in factor pricesbetween nations
- diminishes
- increases
- remains unchanged
- any of the above
Q8 | Leontiff paradox refers to the result that the U S
- exports are more capital intensive than imports
- exports are more capital intensive than u s import substitutes
- imports are more capital intensive than u s exports
- import substitutes are more capital intensive than u s exports
Q9 | The Exchange rate is kept the same in all parts of the market through
- exchange rate arbiterage
- interest arbiterage
- hedging
- speculation.
Q10 | Hedcging refers to
- acceptance of foreign exchange risk
- covering foreign exchange risk
- foreign exchange speculation
- foreign exchange arbiterage
Q11 | If { } > { } when K= capital and L= labour, and A and B are countries then
- counry a is labour abundant
- counry a is capital abundant
- counry b is labour abundant
- counry b is capital abundant
Q12 | If { } > { } when K= capital and L= labour, and A and B are countries then
- in counry a relative price of labour is low
- in counry a relative price of capital is low
- in counry b relative price of labour is low
- non of the above
Q13 | In Autarchy a nations PPC also shows its
- consumption function
- sales frontier
- profit frontier
- factor endowment
Q14 | Opportunity cost theory
- is anti thesis of recardian theory
- is a synthesis of recardian and smiths theory
- is a reconstruction of the recardian theory in terms of alternative cost.
- non of the above
Q15 | The paradox that Growth can make a country worse off is termed as
- leontiff paradox
- rybezinsky theorem
- immiserising growth
- triffin dilemma
Q16 | “Free trade between two countries in H O model will equalize relative factor pricesprovided there is incomplete specialization.” This is
- the factor price equalization theorem
- rybezinsky theorem
- leontiff paradox
- cascading effect
Q17 | The absolute slope of a concave PPC is given by
- internal equilibrium price ratio
- the marginal rate of transformation
- increasing returns to scale
- all the above
Q18 | If { } > { } when K= capital and L= labour, Pk is price of capital and Pl is priceof labour and A and B are countries then
- counry a is labour abundant
- counry a is capital abundant
- counry b is labour abundant
- counry b is capital abundant
Q19 | Devaluation works best when
- it is accompanied by a decline in short term interest rate
- foreign demad for exports is is elastic
- demand for forign imports is inelastic
- non of the above
Q20 | BOP includes
- current account
- capital account
- official reserve account
- all the above
Q21 | international trade refers to trade between
- two regions of a country
- two countries
- two commodities produced in different countries
- non of the above
Q22 | The trade theory that states that nations should accumulate financial wealth, usuallyin the form of gold, by encouraging exports and discouraging imports is called
- keynesianism
- individualism
- socialism
- mercantilism.
Q23 | Which among the following are the central themes of Mercantilism?
- export or perish.
- strict focus on the wealth accumulation through protectionism.
- no simultaneous gains or sharing of gains among countries are possible. one country can benefit only at the cost of other countries.
- all the above.
Q24 | “An Enquiry in to the nature and causes of Wealth of Nations” is written by
- j s mill
- david recardo
- karl marx
- non of the above
Q25 | Adam Smith identified the basic reason for trade between two nations as
- the difference in absolute advantage
- the difference in comparative advantage
- difference in factor endowments
- non of the above.