McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Arts in Economics (BA Economics) , Master of Business Administration (MBA) .
Chapters
| 1. |
Trade In differentiated products refers to |
| A. | intra industry trade |
| B. | inter industry trade |
| C. | trade based on economies of scale |
| D. | non of the above |
| Answer» A. intra industry trade | |
| 2. |
The terms of trade of developing countries have a secular tendency to |
| A. | improve |
| B. | deteriorate |
| C. | first improve and then deteriorate |
| D. | remain the same |
| Answer» B. deteriorate | |
| 3. |
The opportunity cost theory assumes that |
| A. | labour is the only factor of production |
| B. | the price or the cost of a commodity can be determined by the labour content in it |
| C. | labour is homogeneous |
| D. | non of the above |
| Answer» D. non of the above | |
| 4. |
If a nation gains from trade its consumption point is |
| A. | on the production possibility frontier (ppc |
| B. | inside the ppc |
| C. | above the ppc |
| D. | any of the above |
| Answer» C. above the ppc | |
| 5. |
Given below is a table whowing the maximum amount of wheat and cloth that the U K 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 |
| A. | us have comparative advantage in cloth and u k have comparative advantage in wheat |
| B. | u k have comparative advantage in cloth and us have comparative advantage in wheat |
| C. | us have comparative advantage in cloth and wheat |
| D. | uk have comparative advantage in cloth wheat |
| Answer» A. us have comparative advantage in cloth and u k have comparative advantage in wheat | |
| 6. |
If a nations terms of trade is ½ its trade partners terms of trade is |
| A. | 4 |
| B. | 2 |
| C. | 1 |
| D. | ½ |
| Answer» B. 2 | |
| 7. |
The H O theory postulates that as a result of trade the differences in factor prices between nations |
| A. | diminishes |
| B. | increases |
| C. | remains unchanged |
| D. | any of the above |
| Answer» A. diminishes | |
| 8. |
Leontiff paradox refers to the result that the U S |
| A. | exports are more capital intensive than imports |
| B. | exports are more capital intensive than u s import substitutes |
| C. | imports are more capital intensive than u s exports |
| D. | import substitutes are more capital intensive than u s exports |
| Answer» D. import substitutes are more capital intensive than u s exports | |
| 9. |
The Exchange rate is kept the same in all parts of the market through |
| A. | exchange rate arbiterage |
| B. | interest arbiterage |
| C. | hedging |
| D. | speculation. |
| Answer» A. exchange rate arbiterage | |
| 10. |
Hedcging refers to |
| A. | acceptance of foreign exchange risk |
| B. | covering foreign exchange risk |
| C. | foreign exchange speculation |
| D. | foreign exchange arbiterage |
| Answer» B. covering foreign exchange risk | |
| 11. |
If { } > { } when K= capital and L= labour, and A and B are countries then |
| A. | counry a is labour abundant |
| B. | counry a is capital abundant |
| C. | counry b is labour abundant |
| D. | counry b is capital abundant |
| Answer» B. counry a is capital abundant | |
| 12. |
If { } > { } when K= capital and L= labour, and A and B are countries then |
| A. | in counry a relative price of labour is low |
| B. | in counry a relative price of capital is low |
| C. | in counry b relative price of labour is low |
| D. | non of the above |
| Answer» B. in counry a relative price of capital is low | |
| 13. |
In Autarchy a nations PPC also shows its |
| A. | consumption function |
| B. | sales frontier |
| C. | profit frontier |
| D. | factor endowment |
| Answer» A. consumption function | |
| 14. |
Opportunity cost theory |
| A. | is anti thesis of recardian theory |
| B. | is a synthesis of recardian and smiths theory |
| C. | is a reconstruction of the recardian theory in terms of alternative cost. |
| D. | non of the above |
| Answer» C. is a reconstruction of the recardian theory in terms of alternative cost. | |
| 15. |
The paradox that Growth can make a country worse off is termed as |
| A. | leontiff paradox |
| B. | rybezinsky theorem |
| C. | immiserising growth |
| D. | triffin dilemma |
| Answer» C. immiserising growth | |
| 16. |
“Free trade between two countries in H O model will equalize relative factor prices provided there is incomplete specialization.” This is |
| A. | the factor price equalization theorem |
| B. | rybezinsky theorem |
| C. | leontiff paradox |
| D. | cascading effect |
| Answer» A. the factor price equalization theorem | |
| 17. |
The absolute slope of a concave PPC is given by |
| A. | internal equilibrium price ratio |
| B. | the marginal rate of transformation |
| C. | increasing returns to scale |
| D. | all the above |
| Answer» B. the marginal rate of transformation | |
| 18. |
If { } > { } when K= capital and L= labour, Pk is price of capital and Pl is price of labour and A and B are countries then |
| A. | counry a is labour abundant |
| B. | counry a is capital abundant |
| C. | counry b is labour abundant |
| D. | counry b is capital abundant |
| Answer» B. counry a is capital abundant | |
| 19. |
Devaluation works best when |
| A. | it is accompanied by a decline in short term interest rate |
| B. | foreign demad for exports is is elastic |
| C. | demand for forign imports is inelastic |
| D. | non of the above |
| Answer» B. foreign demad for exports is is elastic | |
| 20. |
BOP includes |
| A. | current account |
| B. | capital account |
| C. | official reserve account |
| D. | all the above |
| Answer» D. all the above | |
| 21. |
international trade refers to trade between |
| A. | two regions of a country |
| B. | two countries |
| C. | two commodities produced in different countries |
| D. | non of the above |
| Answer» B. two countries | |
| 22. |
The trade theory that states that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports is called |
| A. | keynesianism |
| B. | individualism |
| C. | socialism |
| D. | mercantilism. |
| Answer» D. mercantilism. | |
| 23. |
Which among the following are the central themes of Mercantilism? |
| A. | export or perish. |
| B. | strict focus on the wealth accumulation through protectionism. |
| C. | no simultaneous gains or sharing of gains among countries are possible. one country can benefit only at the cost of other countries. |
| D. | all the above. |
| Answer» D. all the above. | |
| 24. |
“An Enquiry in to the nature and causes of Wealth of Nations” is written by |
| A. | j s mill |
| B. | david recardo |
| C. | karl marx |
| D. | non of the above |
| Answer» D. non of the above | |
| 25. |
Adam Smith identified the basic reason for trade between two nations as |
| A. | the difference in absolute advantage |
| B. | the difference in comparative advantage |
| C. | difference in factor endowments |
| D. | non of the above. |
| Answer» A. the difference in absolute advantage | |
| 26. |
Theory of Absolute advantage is |
| A. | a rejoinder of merchantalism |
| B. | a corollary of merchantalism |
| C. | critique of merchantalism |
| D. | non of the above. |
| Answer» C. critique of merchantalism | |
| 27. |
The Absolute advantage theory indicates that a country should engage in the production and exchange of those commodities where it has |
| A. | a comparative advantage |
| B. | an absolute advantage |
| C. | relative factor endowment |
| D. | greater opportunity cost. |
| Answer» B. an absolute advantage | |
| 28. |
The ability to produce more of a good or service than competitors, using the same amount of resources is |
| A. | a comparative advantage |
| B. | an absolute advantage |
| C. | relative factor endowment |
| D. | greater opportunity cost. |
| Answer» A. a comparative advantage | |
| 29. |
Which among the following are the major assumptions of Absolute advantage theory? |
| A. | 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. |
| B. | 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 |
| C. | 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. |
| D. | all the above. |
| Answer» D. all the above. | |
| 30. |
Absolute advantage theory assumes |
| A. | no technological change. |
| B. | no transportation cost |
| C. | labour theory of value |
| D. | all the above |
| Answer» D. all the above | |
| 31. |
The principle of comparative advantage was first introduced by |
| A. | david ricardo |
| B. | j s mill |
| C. | adam smith |
| D. | karl marx |
| Answer» A. david ricardo | |
| 32. |
The ability of a firm or individual to produce goods and/or services at a lower opportunity cost than other firms or individuals. |
| A. | absolute advantage |
| B. | opportunity cost |
| C. | comparative advantage |
| D. | non of the above. |
| Answer» C. comparative advantage | |
| 33. |
Major assumptions of the theory of Comparitive advantage are |
| A. | there are two countries and two commodities and the countries have absolute advantage in both commodities . |
| B. | 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 |
| C. | 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. |
| D. | all the above. |
| Answer» D. all the above. | |
| 34. |
The ‘Reciprocal Demand Theory’ in International Trade can be attributed to |
| A. | adam smith |
| B. | david recardo |
| C. | j s mill |
| D. | karl marx |
| Answer» C. j s mill | |
| 35. |
The curve that shows howmuch of its import commodity a nation requires in exchange for various quantities of its export commodity is |
| A. | demand curve |
| B. | laffer curve |
| C. | phillips curev |
| D. | offer curev |
| Answer» D. offer curev | |
| 36. |
Reciprocal Demand Curve is another name for |
| A. | demand curve |
| B. | laffer curve |
| C. | phillips curev |
| D. | offer curev |
| Answer» D. offer curev | |
| 37. |
The Reciprocal Demand theory was put into graphic form by |
| A. | adam smith |
| B. | david recardo |
| C. | alfred marshall and f.y. edgeworth |
| D. | non of the above |
| Answer» C. alfred marshall and f.y. edgeworth | |
| 38. |
The amount of commodity a nation is willing to give up to get an additional unit of another commodity and still remain on the same indifference curve is known as |
| A. | marginal rate of substitution |
| B. | marginal rate of transformation |
| C. | marginal product |
| D. | non of the above |
| Answer» A. marginal rate of substitution | |
| 39. |
------------theory states that countries which are rich in labour will export labour intensive goods and countries which are rich in capital will export capital intensive goods |
| A. | the heckscher ohlin theorem |
| B. | stolper samuelson theorem |
| C. | leontiff paradox |
| D. | rybezensky theorem. |
| Answer» A. the heckscher ohlin theorem | |
| 40. |
Which among the following is NOT an assumption of H-O Theorem |
| A. | there are two countries involved. each country has two factors (labour andcapital) and produce two commodities either labour intensively or capital intensively. |
| B. | 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. |
| C. | there are no transportation costs. |
| D. | factors are freely mobile within a country but immobile between countries. |
| Answer» B. 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. | |
| 41. |
Which among the following is an assumption of H-O Theorem |
| A. | 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. |
| B. | 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. |
| C. | there is full employment of resources in both countries and demand is identical in both countries. |
| D. | all the above |
| Answer» A. 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. | |
| 42. |
The HO theory deals with which type of trade? |
| A. | intra industry trade |
| B. | trade based on economies of scale |
| C. | trade based on imitation gaps and product cycles |
| D. | inter industry tarde |
| Answer» A. intra industry trade | |
| 43. |
The basis for mutually advantageous trade in H O theory is |
| A. | technology |
| B. | factor endowments |
| C. | economies of scale |
| D. | tastes. |
| Answer» C. economies of scale | |
| 44. |
Trade in differentiated products are also called |
| A. | intra industry trade |
| B. | trade based on economies of scale |
| C. | trade based on imitation gaps and product cycles |
| D. | inter industry tarde |
| Answer» D. inter industry tarde | |
| 45. |
Which among the following are the major limitations of the H O theorem? |
| A. | it explains only a part of the world trade as it ignores trade in differentiated products. |
| B. | factor endowment is not the sole factor influencing commodity price and international trade. |
| C. | the theory is empirically proved wrong in the case of u s economy. |
| D. | all the above. |
| Answer» A. it explains only a part of the world trade as it ignores trade in differentiated products. | |
| 46. |
_______________states that international trade will bring about equalization in the returns to homogeneous factors across countries, even without their physical movement. |
| A. | theory of comparative advantage, |
| B. | stolper-samuelson theorem, |
| C. | rybczynski theorem, and |
| D. | leontiff paradox. |
| Answer» B. stolper-samuelson theorem, | |
| 47. |
____________states that at constant commodity prices, an increase in the quantity of one factor increases the production of the commodity intensive in this factor and reduces the output of the other commodity which is intensive in the constant factor. |
| A. | theory of comparative advantage, |
| B. | stolper-samuelson theorem, |
| C. | rybczynski theorem, and |
| D. | leontiff paradox. |
| Answer» C. rybczynski theorem, and | |
| 48. |
Net barter Terms of Trade is defined as |
| A. | px/pm |
| B. | g = qm/qx x 100 |
| C. | i = px/pm x qx |
| D. | all the above |
| Answer» A. px/pm | |
| 49. |
The foreign exchange rate is NOT |
| A. | the price of one currency expresses in terms of another. |
| B. | rate at which of one commodity expresses in terms of another. |
| C. | the value of one currency in terms of another |
| D. | fixed for ever. |
| Answer» B. rate at which of one commodity expresses in terms of another. | |
| 50. |
______________means the measures adopted for avoiding risks. |
| A. | hedging |
| B. | speculation |
| C. | arbitrage |
| D. | non of the above |
| Answer» A. hedging | |
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