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
| 101. |
It is drawback of free trade: |
| A. | Prices of local goods rise |
| B. | Government looses income from custom duties |
| C. | National resources are underutilized |
| D. | (a) and (b) of above |
| Answer» A. Prices of local goods rise | |
| 102. |
Free traders maintain that an open economy is advantageous in that it provides all of the following except: |
| A. | Increased competition for world producers |
| B. | A wider selection of products for consumers |
| C. | The utilization of the most efficient production methods |
| D. | Relatively high wage levels for all domestic workers |
| Answer» A. Increased competition for world producers | |
| 103. |
Recent pressures for protectionism in the United States have been motivated by all of the following except: |
| A. | U.S. firms shipping component production overseas |
| B. | High profit levels for American corporations |
| C. | Sluggish rates of productivity growth in the United States |
| D. | High unemployment rates among American workers |
| Answer» C. Sluggish rates of productivity growth in the United States | |
| 104. |
A sudden shift from import tariffs to free trade may induce short-term unemployment in: |
| A. | Import-competing industries |
| B. | Industries that are only exporters |
| C. | Industries that sell domestically as well as export |
| D. | Industries that neither import nor export |
| Answer» B. Industries that are only exporters | |
| 105. |
Which of the following statements is correct? |
| A. | In a customs union, member nations apply a uniform external tariff |
| B. | in a free-trade area, member nations harmonize their monetary and fiscal policies |
| C. | within a customs union there is unrestricted factor movement |
| D. | a customs union is a higher form of economic integration than a common market |
| Answer» C. within a customs union there is unrestricted factor movement | |
| 106. |
A customs union that allows for the free movement of labor and capital among its member nations is called a: |
| A. | preferential trade arrangement |
| B. | free-trade area |
| C. | common market |
| D. | all of the above |
| Answer» C. common market | |
| 107. |
A trade-creating customs union is one where: |
| A. | lower-cost imports from outside the customs union are replaced by higher-cost imports from a union member |
| B. | some domestic production in a member nation is replaced by lower-cost imports from another member nation |
| C. | trade among members increases but trade with nonmembers decreases |
| D. | trade among members decreases while trade with nonmembers increases |
| Answer» D. trade among members decreases while trade with nonmembers increases | |
| 108. |
A trade-diverting customs union: |
| A. | increases trade among union members and with nonmember nations |
| B. | reduces trade among union members and with nonmember nations |
| C. | increases trade among members but reduces trade with non-members |
| D. | reduces trade among union members but increases it with nonmembers |
| Answer» B. reduces trade among union members and with nonmember nations | |
| 109. |
A trade-diverting customs union results in: |
| A. | trade diversion only |
| B. | trade creation only |
| C. | both trade creation and trade diversion |
| D. | we cannot say |
| Answer» C. both trade creation and trade diversion | |
| 110. |
A trade-diverting customs union: |
| A. | increases the welfare of member and nonmember nations |
| B. | reduces the welfare of member and nonmember nations |
| C. | increases the welfare of member nations but reduces that of nonmembers |
| D. | reduces the welfare of nonmembers and may increase or reduce that of members |
| Answer» D. reduces the welfare of nonmembers and may increase or reduce that of members | |
| 111. |
A tariff: |
| A. | Increases the volume of trade |
| B. | Reduces the volume of trade |
| C. | Has no effect on volume of trade |
| D. | (a) and (c) of above |
| Answer» C. Has no effect on volume of trade | |
| 112. |
A tariff is: |
| A. | A restriction on the number of export firms |
| B. | Limit on the amount of imported goods |
| C. | Tax and imports |
| D. | (b) and (c) of above |
| Answer» C. Tax and imports | |
| 113. |
What would encourage trade between two countries: |
| A. | Different tax system |
| B. | Frontier checks |
| C. | National currencies |
| D. | Reduced tariffs |
| Answer» D. Reduced tariffs | |
| 114. |
In a free trade world in which no restrictions exist, international trade will lead to: |
| A. | Reduced real living standard |
| B. | Decreased efficiency |
| C. | Increased efficiency |
| D. | Reduced real GDP |
| Answer» C. Increased efficiency | |
| 115. |
Govt. policy about exports and imports is called: |
| A. | Monetary policy |
| B. | Fiscal policy |
| C. | Commercial policy |
| D. | Finance policy |
| Answer» D. Finance policy | |
| 116. |
International trade and domestic trade differ because of: |
| A. | Trade restrictions |
| B. | Immobility of factors |
| C. | Different government policies |
| D. | All of the above |
| Answer» B. Immobility of factors | |
| 117. |
What would encourage trade between two countries? |
| A. | Different tax system |
| B. | Quality control |
| C. | Reduced tariffs |
| D. | Fixing import quota |
| Answer» A. Different tax system | |
| 118. |
In the European Union: |
| A. | All member countries have a single exchange rate |
| B. | All members set their own tariffs |
| C. | There is a common tariff against non-members |
| D. | All taxes are set the same |
| Answer» C. There is a common tariff against non-members | |
| 119. |
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? |
| A. | Athens |
| B. | Brussels |
| C. | Rome |
| D. | Amsterdam |
| Answer» C. Rome | |
| 120. |
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? |
| A. | 500 million people |
| B. | 292 million people |
| C. | 1.3 billion people |
| D. | 127 million people |
| Answer» A. 500 million people | |
| 121. |
Which two institutions decide the Union's budget? |
| A. | The Council of Ministers and the European Commission |
| B. | The European Parliament and the European Central Bank |
| C. | The Council of Ministers and the European Parliament |
| D. | The European Central Bank and the European Commission |
| Answer» C. The Council of Ministers and the European Parliament | |
| 122. |
The European Union is one powerful global economic bloc. ASEAN is best described as being: |
| A. | A free trade zone |
| B. | A confederation of states |
| C. | A customs union |
| D. | A monetary union |
| Answer» A. A free trade zone | |
| 123. |
Which of the following EU countries are sometimes referred to as the PIGS countries? |
| A. | Portugal, Ireland. Greece, Spain |
| B. | Poland, Italy, Germany, Slovenia |
| C. | Poland, Ireland, Greece, Switzerland |
| D. | Portugal, Italy, Greece, Slovenia |
| Answer» A. Portugal, Ireland. Greece, Spain | |
| 124. |
What is the main reason behind the introduction of the euro? |
| A. | It promotes economic sovereignty |
| B. | It can protect business trading from currency fluctuations |
| C. | To allow the free movement of people |
| D. | It was a branding exercise |
| Answer» B. It can protect business trading from currency fluctuations | |
| 125. |
Which of the following are exclusive EU competencies in relation to Member States? |
| A. | Conservation of marine biological resources (common fisheries policies), common market policies, the customs union and monetary policy for Member States belonging to the Eurozone. |
| B. | The customs union, the environment, agriculture and consumer protection. |
| C. | Monetary policy for Member states belonging to the Eurozone, tourism, transport and industrial policy, EU regional Policy. |
| D. | The customs union, common commercial (trade) policies, education and culture. |
| Answer» A. Conservation of marine biological resources (common fisheries policies), common market policies, the customs union and monetary policy for Member States belonging to the Eurozone. | |
| 126. |
A common or single market will have all of the following features except: |
| A. | No internal trade barriers |
| B. | Common external tariff |
| C. | Factor and Asset mobility |
| D. | A common currency |
| Answer» D. A common currency | |
| 127. |
Which of the options below is the only characteristic of a free trade area? |
| A. | A common currency |
| B. | Common economic policy |
| C. | No internal trade barriers |
| D. | Common external tariff |
| Answer» C. No internal trade barriers | |
| 128. |
On the balance-of-payments statements, merchandise imports are classified in the: |
| A. | Current account |
| B. | Capital account |
| C. | Unilateral transfer account |
| D. | Official settlements account |
| Answer» A. Current account | |
| 129. |
The balance of international indebtedness is a record of a country’s international: |
| A. | Investment position over a period of time |
| B. | Investment position at a fixed point in time |
| C. | Trade position over a period of time |
| D. | Trade position at a fixed point in time |
| Answer» B. Investment position at a fixed point in time | |
| 130. |
Which balance-of-payments item does not directly enter into the calculation of the U.S.gross domestic product? |
| A. | Merchandise imports |
| B. | Shipping and transportation receipts |
| C. | Direct foreign investment |
| D. | Service exports |
| Answer» C. Direct foreign investment | |
| 131. |
Which of the following is considered a capital inflow? |
| A. | A sale of U.S. financial assets to a foreign buyer |
| B. | A loan from a U.S. bank to a foreign borrower |
| C. | A purchase of foreign financial assets by a U.S. buyer |
| D. | A U.S. citizen’s repayment of a loan from a foreign bank |
| Answer» A. A sale of U.S. financial assets to a foreign buyer | |
| 132. |
Which of the following would call for inpayments to the United States? |
| A. | American imports of German steel |
| B. | Gold flowing out of the United States |
| C. | American unilateral transfers to less-developed countries |
| D. | American firms selling insurance to British shipping companies |
| Answer» D. American firms selling insurance to British shipping companies | |
| 133. |
In a country’s balance of payments, which of the following transactions are debits? |
| A. | Domestic bank balances owned by foreigners are decreased |
| B. | Foreign bank balances owned by domestic residents are decreased |
| C. | Assets owned by domestic residents are sold to nonresidents |
| D. | Securities are sold by domestic residents to nonresidents |
| Answer» A. Domestic bank balances owned by foreigners are decreased | |
| 134. |
Which of the following is classified as a credit in the U.S. balance of payments? |
| A. | U.S. exports |
| B. | U.S. gifts to other countries |
| C. | A flow of gold out of the U.S. |
| D. | Foreign loans made by U.S. companies |
| Answer» A. U.S. exports | |
| 135. |
What is "immiserizing growth"? |
| A. | Export-biased growth that worsens terms of trade so that a country is worse off as a result. |
| B. | The specialization of low-income countries in production of low-wage products. |
| C. | Trade that hurts the poorest group of people. |
| D. | Improvement in a country's terms of trade at the expense of other countries. |
| Answer» A. Export-biased growth that worsens terms of trade so that a country is worse off as a result. | |
| 136. |
What is the "transfer problem"? |
| A. | The fact that international transfers affect terms of trade when they are not taken into account. |
| B. | Rich countries do not transfer a sufficient amount of money to poor countries. |
| C. | Negative effects on a country that transfers money to others. |
| D. | The severe indebtedness of some low-income countries. |
| Answer» A. The fact that international transfers affect terms of trade when they are not taken into account. | |
| 137. |
Unlike the balance of payments, the balance of international indebtedness indicates the international: |
| A. | Investment position of a country at a given moment in time |
| B. | Investment position of a country over a one-year period |
| C. | Trade position of a country at a given moment in time |
| D. | Trade position of a country over a one-year period |
| Answer» A. Investment position of a country at a given moment in time | |
| 138. |
Which of the following indicates the international investment position of a country at a given moment in time? |
| A. | The balance of payments |
| B. | The capital account of the balance of payments |
| C. | The current account of the balance of payments |
| D. | The balance of international indebtedness |
| Answer» D. The balance of international indebtedness | |
| 139. |
Concerning the U.S. balance of payments, which account is defined in essentially the same way as the net export of goods and services, which comprises part of the country’s gross domestic product? |
| A. | Merchandise trade account |
| B. | Goods and services account |
| C. | Current account |
| D. | Capital account |
| Answer» B. Goods and services account | |
| 140. |
If an American receives dividends from the shares of stock she or he owns in Toyota, Inc., a Japanese firm, the transaction would be recorded on the U.S. balance of payments as a: |
| A. | Capital account debit |
| B. | Capital account credit |
| C. | Current account debit |
| D. | Current account credit |
| Answer» D. Current account credit | |
| 141. |
If the United States government sells military hardware to Saudi Arabia, the transaction would be recorded on the U.S. balance of payments as a: |
| A. | Current account debit |
| B. | Current account credit |
| C. | Capital account debit |
| D. | Capital account credit |
| Answer» B. Current account credit | |
| 142. |
The U.S. balance of trade is determined by: |
| A. | Exchange rates |
| B. | Growth of economies overseas |
| C. | Relative prices in world markets |
| D. | All of the above |
| Answer» D. All of the above | |
| 143. |
U.S. military aid granted to foreign countries is entered in the: |
| A. | Merchandise trade account |
| B. | Capital account |
| C. | Current account |
| D. | Official settlements account |
| Answer» C. Current account | |
| 144. |
If the U.S. faces a balance-of-payments deficit on the current account, it must run a surplus on: |
| A. | The official settlements account |
| B. | The capital account |
| C. | Either the official settlements account or the capital account |
| D. | Both the official settlements account and the capital account |
| Answer» C. Either the official settlements account or the capital account | |
| 145. |
The current account of the U.S. balance of payments does not include: |
| A. | Investment income |
| B. | Merchandise exports and imports |
| C. | The sale of securities to foreigners |
| D. | Unilateral transfers |
| Answer» C. The sale of securities to foreigners | |
| 146. |
The U.S. has a balance of trade deficit when its: |
| A. | Merchandise exports exceed its merchandise imports |
| B. | Merchandise imports exceed its merchandise exports |
| C. | Goods and services exports exceed its goods and services imports |
| D. | Goods and services imports exceed its goods and services exports |
| Answer» B. Merchandise imports exceed its merchandise exports | |
| 147. |
The value to American residents of income earned from overseas investments shows up in which account in the U.S. balance of payments? |
| A. | Current account |
| B. | Trade account |
| C. | Unilateral transfers account |
| D. | Capital account |
| Answer» A. Current account | |
| 148. |
What would be the effects of an export subsidy on oil imposed by Russia? |
| A. | Relative world supply of oil rises and relative world demand falls. |
| B. | Relative world supply of oil falls and relative world demand rises. |
| C. | Relative world supply of and relative world demand for oil rise. |
| D. | Relative world supply of and relative world demand for oil fall. |
| Answer» A. Relative world supply of oil rises and relative world demand falls. | |
| 149. |
What is the Metzler paradox? |
| A. | An export subsidy can lead to an increase in the internal price of the subsidized good. |
| B. | It is the same as immiserizing growth. |
| C. | A tariff on imports can lead to a decline in the internal price of the go |
| Answer» C. A tariff on imports can lead to a decline in the internal price of the go | |
| 150. |
A country that is a net international debtor initially experiences: |
| A. | An augmented savings pool available to finance domestic spending |
| B. | A higher interest rate, which leads to lower domestic investment |
| C. | A loss of funds to trading partners overseas |
| D. | A decrease in its services exports to other countries |
| Answer» A. An augmented savings pool available to finance domestic spending | |
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