McqMate
Chapters
1. |
Adam Smith favoured |
A. | Free trade among nations |
B. | Regulation of trade among nations |
C. | Closed economies |
D. | None of the above |
Answer» A. Free trade among nations |
2. |
Which of the following is the cause of international trade as per Heckscher-Ohlin trade theory? |
A. | Difference in factor availability |
B. | Difference in cost of production |
C. | Difference in trade |
D. | Difference in currency system |
Answer» A. Difference in factor availability |
3. |
The theory of comparative advantage in international trade was propounded by |
A. | Kindleberger |
B. | Adam Smith |
C. | David Ricardo |
D. | J.S. Mill |
Answer» C. David Ricardo |
4. |
According to Ohlin, the comparative cost differences arise because of |
A. | Labour cost differences |
B. | Factor endowment differences |
C. | Exchange rate differences |
D. | None of the above |
Answer» B. Factor endowment differences |
5. |
Adam Smith’s theory of international trade is based on |
A. | Absolute differences in costs |
B. | Homogeneity of labour |
C. | Differences of exchange ratios |
D. | Mobility of factors of production between countires |
Answer» A. Absolute differences in costs |
6. |
According to comparative advantage theory |
A. | Capital is the only factor of production |
B. | Labour is the only factor of production |
C. | Both capital and labour are factors of production |
D. | None of the above |
Answer» B. Labour is the only factor of production |
7. |
Heckscher-Ohlin theory of trade is based on |
A. | Two-by-two-by-two model |
B. | Three-by-three-by-three model |
C. | Four-by-four-by-four model |
D. | All of the above |
Answer» A. Two-by-two-by-two model |
8. |
In Ricardian theory of international trade, the only factor of production is |
A. | Land |
B. | Labour |
C. | Capital |
D. | All of the above |
Answer» B. Labour |
9. |
The Absolute Advantage theory of international trade was propounded by |
A. | Adam Smith |
B. | David Ricardo |
C. | Alfred Marshall |
D. | Lionel Robbins |
Answer» A. Adam Smith |
10. |
Haberler’s Opportunity cost theory explains the doctrine of comparative cost in terms of |
A. | The saving’s curve |
B. | The consumption curve |
C. | The substitution curve |
D. | The supply curve |
Answer» C. The substitution curve |
11. |
According to the Heckscher-Ohlin theory of trade, the most important cause of difference in relative commodity prices and trade between nations is a difference in |
A. | Factor endowment |
B. | Tastes |
C. | Demand conditions |
D. | All of the above |
Answer» A. Factor endowment |
12. |
Under constant opportunity cost, the production possibility curve is |
A. | Convex to the origin |
B. | Straight line |
C. | Concave to the origin |
D. | Upward sloping |
Answer» B. Straight line |
13. |
According to the theory of comparative advantage, countries gain from trade, because |
A. | Trade makes firms more competitive, reducing their market power |
B. | Every country has an absolute advantage in producing something |
C. | World output can rise when each country specializes in what it does relatively best |
D. | None of the above |
Answer» C. World output can rise when each country specializes in what it does relatively best |
14. |
Among the difference between inter-regional and international trade, the reason for international factor immobility includes |
A. | Difference in languages |
B. | Difference in occupational skills |
C. | Restrictions imposed by foreign country on labour immigration |
D. | All of the above |
Answer» D. All of the above |
15. |
According to Adam Smith, free trade is the result of |
A. | Division of labour and specialisation both at the national and international level |
B. | Specialisation only at the national level |
C. | Division of labour and specialisation at the national level only |
D. | Division of labour only at the international level |
Answer» A. Division of labour and specialisation both at the national and international level |
16. |
According to Ricardo, trade is possible between two countries when |
A. | One country has absolute advantage in production of both commodities |
B. | One country has an absolute advantage for production of both commodities but comparative advantage in the production of one commodity than the other country |
C. | One country does not have any advantage in the production of both commodities |
D. | A country does not have any line of production |
Answer» B. One country has an absolute advantage for production of both commodities but comparative advantage in the production of one commodity than the other country |
17. |
David Ricardo believed that the international trade is governed by |
A. | Absolute cost advantage only |
B. | Absolute cost and comparative cost advantage |
C. | Comparative cost advantage |
D. | Mobility of factors |
Answer» C. Comparative cost advantage |
18. |
The basics and gains from international trade under the theory of opportunity cost is determined by |
A. | Homogeneity of labours |
B. | The shape of the substitution curve or production possibility curve under different cost conditions |
C. | Imperfect competition in factor and commodity markets |
D. | Change in technology |
Answer» B. The shape of the substitution curve or production possibility curve under different cost conditions |
19. |
The production possibility curve under increasing opportunity costs is concave to the origin because |
A. | The opportunity cost of leaving a unit of one commodity to have an additional unit of the other is constant |
B. | Each country completely specializes in the production of only one commodity after trade |
C. | They are the same at all points |
D. | When a country in the production of one commodity in which it has comparative advantage, its opportunity costs increases |
Answer» D. When a country in the production of one commodity in which it has comparative advantage, its opportunity costs increases |
20. |
The importance of international trade includes |
A. | Adverse terms of trade |
B. | Lack of industrial diversification |
C. | Balance of Payments deficit |
D. | None of the above |
Answer» D. None of the above |
21. |
According to classical view, one of the main difference between inter-regional and international trade is |
A. | Factor mobility |
B. | Wage flexibility |
C. | Both (a) and (b |
D. | None of the above |
Answer» A. Factor mobility |
22. |
According to Adam Smith, diversification of labour at the international level requires the |
A. | Existence of absolute differences in costs |
B. | Existence of comparative differences in costs |
C. | Existence of least cost combination of factors |
D. | Existence of labour involved in production of a commodity |
Answer» A. Existence of absolute differences in costs |
23. |
The basic of international trade according to Ricardo is that |
A. | A country will export those commodities in which its comparative production costs are high or will import those commodities in which its comparative production costs are less |
B. | A country will import those commodities in which its comparative production cost are the same with other countries |
C. | A country will export those commodities in which its comparative production costs are less or will import those commodities in which its comparative production costs are high |
D. | A country will export those commodities in which its comparative production |
Answer» C. A country will export those commodities in which its comparative production costs are less or will import those commodities in which its comparative production costs are high |
24. |
According to physical criterion of the H-O theory of trade, a country is said to be relatively capital abundant if and only if |
A. | A country is having capital relatively cheap and labour relative costly |
B. | A country is endowed with a higher proportion of capital to labour than the other country |
C. | A country is having labour relatively cheap and capital relatively costly |
D. | A country is endowed with a higher proportion of labour to capital than the other country |
Answer» B. A country is endowed with a higher proportion of capital to labour than the other country |
25. |
The price criterion if the H-O theory of trade lays down that |
A. | A country having labour relatively cheap and capital relatively costly is capitalabundant |
B. | A country having capital relatively cheap and labour relatively costly is labourabundant |
C. | A country having both capital and labour cheap is capital-abundant |
D. | A country having capital relatively cheap and labour relatively costly is capital abundant |
Answer» D. A country having capital relatively cheap and labour relatively costly is capital abundant |
26. |
The main reason for different nations to enter into trade is that |
A. | Every nation can produce by itself all the commodities and services required by its citizens/people |
B. | Some nations are capable to produce all the goods and services required by its people |
C. | No country has the capacity to produce all the goods and services required by its citizens/people |
D. | None of the above |
Answer» C. No country has the capacity to produce all the goods and services required by its citizens/people |
27. |
According to the absolute differences in cost theory of trade |
A. | No country should specialize in the production of any commodity |
B. | Every country should specialize in the production of commodities which it can produce more cheaply than other countries and exchange it for commodities which are cheaper in other countries |
C. | Every country should specialize in production of goods which it can produce at higher cost than other countries and exchange it for commodities which are costlier than other countries |
D. | All of the above |
Answer» B. Every country should specialize in the production of commodities which it can produce more cheaply than other countries and exchange it for commodities which are cheaper in other countries |
28. |
International trade refers to |
A. | Domestic trade |
B. | Inter-regional trade |
C. | Trade between two nations or countries |
D. | Internal trade |
Answer» C. Trade between two nations or countries |
29. |
The classical theory of international trade is based on |
A. | Labour theory of value |
B. | Less than full employment |
C. | Exchange rate differences |
D. | None of the above |
Answer» A. Labour theory of value |
30. |
The necessity of absolute differences in costs of international trade is associated with |
A. | Comparative advantage theory |
B. | Opportunity Cost theory |
C. | Absolute advantage theory |
D. | Theory of Reciprocal Demand |
Answer» C. Absolute advantage theory |
31. |
The opportunity cost theory considers |
A. | Labour as the only factor of production |
B. | Capital as the only factor of production |
C. | Both labour and capital |
D. | Land, labour and capital |
Answer» C. Both labour and capital |
32. |
The Comparative theory of international trade is based on |
A. | Constant costs |
B. | Variable costs |
C. | Increasing costs |
D. | Decreasing costs |
Answer» A. Constant costs |
33. |
The H-O theory of international trade was propounded by Ohlin in |
A. | 1932 |
B. | 1933 |
C. | 1934 |
D. | 1935 |
Answer» B. 1933 |
34. |
Community indifference curves have the same characteristics as |
A. | Transformation curve |
B. | Offer curve |
C. | Indifference curve |
D. | Production possibility curve |
Answer» C. Indifference curve |
35. |
The factor price ratio(PC/PL)A < (PC/PL)B of countries A & B implies |
A. | Country A is abundant in labour |
B. | Country B is abundant in capital |
C. | Country B is abundant in labour |
D. | Country A is abundant in capital |
Answer» D. Country A is abundant in capital |
36. |
The H-O theory assumed the prevalence of |
A. | Monopolistic forms of market |
B. | Perfect competition |
C. | Oligopolistic forms of market |
D. | Monopoly |
Answer» B. Perfect competition |
37. |
The production possibility curve represents |
A. | The supply side |
B. | The demand side |
C. | Combination of four commodities |
D. | None of the above |
Answer» A. The supply side |
38. |
Relative factor abundance in H-O theory of trade can be defined in terms of |
A. | The physical & price criterion of relative factor abundance(and the price criterion of relative factor abundance |
B. | Perfect mobility of factors of production |
C. | Production governed by increasing returns to scale |
D. | Similar factor intensities |
Answer» C. Production governed by increasing returns to scale |
39. |
The slope of the production possibility curve under Opportunity costs theory is also called |
A. | The average production curve |
B. | Marginal rate of transformation |
C. | Indifference curve |
D. | Isoquant curve |
Answer» B. Marginal rate of transformation |
40. |
The term ‘factor intensity’ refers to |
A. | The relative proportion of two commodities produced in a given period |
B. | The relative amount of resources each country possesses |
C. | The relative proportion of various factors of production used to produce a commodity |
D. | None of the above |
Answer» C. The relative proportion of various factors of production used to produce a commodity |
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