International Economics Set 2
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This set of International Economics Multiple Choice Questions & Answers (MCQs) focuses on International Economics Set 2
Q1 | Theory of Absolute advantage is
- a rejoinder of merchantalism
- a corollary of merchantalism
- critique of merchantalism
- non of the above.
Q2 | The Absolute advantage theory indicates that a country should engage in theproduction and exchange of those commodities where it has
- a comparative advantage
- an absolute advantage
- relative factor endowment
- greater opportunity cost.
Q3 | The ability to produce more of a good or service than competitors, using the sameamount of resources is
- a comparative advantage
- an absolute advantage
- relative factor endowment
- greater opportunity cost.
Q4 | Which among the following are the major assumptions of Absolute advantagetheory?
- there are two countries and two commodities and one country has absolute advantage in one commodity and the second country has advantage in another commodity.
- labour is the only factor of production and labour is homogeneous, that means each unit of labour produces same level of output. value of a commodity is measured in terms of its labour content
- labour is perfectly mobile within the country but perfectly immobile between the countries. it means that workers are free to move between industries within the nation but migration to other countries is impossible.
- all the above.
Q5 | Absolute advantage theory assumes
- no technological change.
- no transportation cost
- labour theory of value
- all the above
Q6 | The principle of comparative advantage was first introduced by
- david ricardo
- j s mill
- adam smith
- karl marx
Q7 | The ability of a firm or individual to produce goods and/or services at a loweropportunity cost than other firms or individuals.
- absolute advantage
- opportunity cost
- comparative advantage
- non of the above.
Q8 | Major assumptions of the theory of Comparitive advantage are
- there are two countries and two commodities and the countries have absolute advantage in both commodities .
- labour is the only factor of production and labour is homogeneous, that means each unit of labour produces same level of output. value of a commodity is measured in terms of its labour content
- labour is perfectly mobile within the country but perfectly immobile between the countries. it means that workers are free to move between industries within the nation but migration to other countries is impossible.
- all the above.
Q9 | The ‘Reciprocal Demand Theory’ in International Trade can be attributed to
- adam smith
- david recardo
- j s mill
- karl marx
Q10 | The curve that shows howmuch of its import commodity a nation requires inexchange for various quantities of its export commodity is
- demand curve
- laffer curve
- phillips curev
- offer curev
Q11 | Reciprocal Demand Curve is another name for
- demand curve
- laffer curve
- phillips curev
- offer curev
Q12 | The Reciprocal Demand theory was put into graphic form by
- adam smith
- david recardo
- alfred marshall and f.y. edgeworth
- non of the above
Q13 | The amount of commodity a nation is willing to give up to get an additional unit ofanother commodity and still remain on the same indifference curve is known as
- marginal rate of substitution
- marginal rate of transformation
- marginal product
- non of the above
Q14 | ------------theory states that countries which are rich in labour will export labour intensive goods and countries which are rich in capital will export capital intensivegoods
- the heckscher ohlin theorem
- stolper samuelson theorem
- leontiff paradox
- rybezensky theorem.
Q15 | Which among the following is NOT an assumption of H-O Theorem
- there are two countries involved. each country has two factors (labour andcapital) and produce two commodities either labour intensively or capital intensively.
- there is no perfect competition in both commodity and factor markets. all production functions are hertogenious. production function is subject to increasing or decreasing returns to scale.
- there are no transportation costs.
- factors are freely mobile within a country but immobile between countries.
Q16 | Which among the following is an assumption of H-O Theorem
- each commodity that a nation produce differs in factor intensity. trade is free i.e. there are no trade restrictions in the form of tariffs or non-tariff barriers.
- the production function remains the same in different countries for the same commodity. for e.g. if commodity a requires more capital in one country then same is the case in other country.
- there is full employment of resources in both countries and demand is identical in both countries.
- all the above
Q17 | The HO theory deals with which type of trade?
- intra industry trade
- trade based on economies of scale
- trade based on imitation gaps and product cycles
- inter industry tarde
Q18 | The basis for mutually advantageous trade in H O theory is
- technology
- factor endowments
- economies of scale
- tastes.
Q19 | Trade in differentiated products are also called
- intra industry trade
- trade based on economies of scale
- trade based on imitation gaps and product cycles
- inter industry tarde
Q20 | Which among the following are the major limitations of the H O theorem?
- it explains only a part of the world trade as it ignores trade in differentiated products.
- factor endowment is not the sole factor influencing commodity price and international trade.
- the theory is empirically proved wrong in the case of u s economy.
- all the above.
Q21 | _______________states that international trade will bring about equalization in the returns to homogeneous factors across countries, even without their physicalmovement.
- theory of comparative advantage,
- stolper-samuelson theorem,
- rybczynski theorem, and
- leontiff paradox.
Q22 | ____________states that at constant commodity prices, an increase in the quantity of one factor increases the production of the commodity intensive in this factor andreduces the output of the other commodity which is intensive in the constant factor.
- theory of comparative advantage,
- stolper-samuelson theorem,
- rybczynski theorem, and
- leontiff paradox.
Q23 | Net barter Terms of Trade is defined as
- px/pm
- g = qm/qx x 100
- i = px/pm x qx
- all the above
Q24 | The foreign exchange rate is NOT
- the price of one currency expresses in terms of another.
- rate at which of one commodity expresses in terms of another.
- the value of one currency in terms of another
- fixed for ever.
Q25 | ______________means the measures adopted for avoiding risks.
- hedging
- speculation
- arbitrage
- non of the above