McqMate
Chapters
| 201. |
Which of the following is NOT a type of offshore bank? |
| A. | Agency office |
| B. | Subsidiary bank |
| C. | Foreign branch |
| D. | Investment bank |
| Answer» D. Investment bank | |
| 202. |
Which of the following is an example of "Eurocurrency" trade? |
| A. | Trade of euros in Europe |
| B. | Trade of dollars for euros anywhere |
| C. | Trade of dollars in Europe |
| D. | Intervention by the ESCB in the euro market |
| Answer» C. Trade of dollars in Europe | |
| 203. |
What are "Eurobanks"? |
| A. | Banks that accept Eurocurrency deposits |
| B. | Banks located in Europe |
| C. | European-owned banks in the U.S. |
| D. | Banks that accept deposits in euros |
| Answer» A. Banks that accept Eurocurrency deposits | |
| 204. |
Which of the following is NOT true about the IBFs? |
| A. | They make loans to foreigners |
| B. | They are not subject to taxes |
| C. | They are only investment banks |
| D. | They accept deposits from foreigners |
| Answer» C. They are only investment banks | |
| 205. |
What institution reduces the risk of bank runs in the U.S.? |
| A. | FDIC |
| B. | Federal Reserve System |
| C. | Congress |
| D. | S&Ls |
| Answer» A. FDIC | |
| 206. |
The Basel Committee: |
| A. | Coordinates monetary policy among 11 countries. |
| B. | Provides international deposit insurance. |
| C. | Provides supervision of the banks trading internationally. |
| D. | Provides LLR services to international banks. |
| Answer» C. Provides supervision of the banks trading internationally. | |
| 207. |
Which of the following is true regarding the capital market development since the 1970s? |
| A. | The extent of intertemporal trade was larger than theory predicts. |
| B. | Onshore-offshore interest rate differentials were too large. |
| C. | The extent of the international portfolio diversification was smaller than theory predicts. |
| D. | The role of emerging markets declined over time. |
| Answer» C. The extent of the international portfolio diversification was smaller than theory predicts. | |
| 208. |
Which one of the following statements is the most accurate? |
| A. | A devaluation occurs when the central bank lowers the domestic currency price of foreign currency, E, and a revaluation occurs when the central bank raises E. |
| B. | A devaluation occurs when the central bank raises the domestic currency price of foreign currency, E, and a revaluation occurs when the central bank lowers E. |
| C. | Devaluation occurs when the domestic currency price of foreign currency, E, is raised, and a revaluation occurs when E is lower |
| Answer» B. A devaluation occurs when the central bank raises the domestic currency price of foreign currency, E, and a revaluation occurs when the central bank lowers E. | |
| 209. |
Which one of the following statements is the most accurate? |
| A. | Depreciation is a rise in E when the exchange rate is fixed, and devaluation is a rise in E when the exchange rate floats. |
| B. | Depreciation is a decrease in E when the exchange rate floats, and devaluation is a rise in E when the exchange rate is fixed. |
| C. | Depreciation is a rise in E when the exchange rate floats, and devaluation is a rise in E when the exchange rate is fix |
| Answer» C. Depreciation is a rise in E when the exchange rate floats, and devaluation is a rise in E when the exchange rate is fix | |
| 210. |
Which one of the following statements is the most accurate? |
| A. | Appreciation is a rise in e when the exchange rate floats, and revaluation is a fall in e when the exchange rate is fixed. |
| B. | Appreciation is a fall in e when the exchange rate floats, and revaluation is a fall in e when the exchange rate is fixed. |
| C. | Appreciation is a fall in e when the exchange rate is fixed, and revaluation is a fall in e when the exchange rate is flexible. |
| D. | Appreciation is a fall in e when the exchange rate floats, and revaluation is a rise in e when the exchange rate is fixed. |
| Answer» B. Appreciation is a fall in e when the exchange rate floats, and revaluation is a fall in e when the exchange rate is fixed. | |
| 211. |
Which one of the following statements is the most accurate? |
| A. | Devaluation reflects a deliberate government decision. |
| B. | Depreciation reflects a deliberate government decision. |
| C. | Devaluation reflects a deliberate government decision, and depreciation is an outcome of government actions and market forces acting together. |
| D. | Depreciation reflects a deliberate government decision, and devaluation is an outcome of government actions and market forces acting together. |
| Answer» C. Devaluation reflects a deliberate government decision, and depreciation is an outcome of government actions and market forces acting together. | |
| 212. |
Which one of the following statements is the most accurate? |
| A. | Revaluation reflects an outcome of government actions and market forces acting together, and appreciation reflects a deliberate government decision. |
| B. | Revaluation reflects a deliberate government decision, and appreciation is an outcome of government actions and market forces acting together. |
| C. | Revaluation reflects a deliberate government decision, and appreciation is an outcome of government actions. |
| D. | Revaluation and appreciation have the same meaning and the same causes. |
| Answer» B. Revaluation reflects a deliberate government decision, and appreciation is an outcome of government actions and market forces acting together. | |
| 213. |
Under fixed exchange rate, which one of the following statements is the most accurate? |
| A. | Devaluation causes a decrease in output, a decrease in official reserves, and a contraction of the money supply. |
| B. | Devaluation causes a rise in output, a rise in official reserves, and an expansion of the money supply. |
| C. | Devaluation causes a rise in output and a rise in official reserves. |
| D. | Devaluation causes a rise in output and an expansion of the money supply. |
| Answer» B. Devaluation causes a rise in output, a rise in official reserves, and an expansion of the money supply. | |
| 214. |
Under fixed exchange rate, which one of the following statements is the most accurate? |
| A. | Devaluation causes a rise in output. |
| B. | Devaluation causes a decrease in output. |
| C. | Devaluation has no effect on output. |
| D. | Devaluation causes a rise in output and a decrease in official reserves. |
| Answer» A. Devaluation causes a rise in output. | |
| 215. |
Under fixed exchange rate, which one of the following statements is the most accurate? |
| A. | Devaluation causes a reduction of the money supply. |
| B. | Devaluation has no effect on the stock of money. |
| C. | Devaluation causes an expansion of the money supply. |
| D. | Devaluation causes a reduction in output. |
| Answer» C. Devaluation causes an expansion of the money supply. | |
| 216. |
The main reason(s) why governments sometimes chose to devalue their currencies is (are): |
| A. | Devaluation allows the government to fight domestic unemployment despite the lack of effective monetary policy. |
| B. | Devaluation improves in the current account. |
| C. | Devaluation increases foreign reserves held by the central bank. |
| D. | All of the above. |
| Answer» D. All of the above. | |
| 217. |
At negative nominal interest rates, which one of the following statements is the most accurate? |
| A. | People would find money strictly preferable to bonds. |
| B. | People would find money strictly preferable to bonds and bonds therefore would be in excess supply. |
| C. | People would find money strictly preferable to bonds and bonds therefore would be in excess dema |
| Answer» B. People would find money strictly preferable to bonds and bonds therefore would be in excess supply. | |
| 218. |
Which of the following exchange rate policies uses a target exchange rate, but allows the target to change? |
| A. | fixed exchange rate |
| B. | flexible exchange rate |
| C. | crawling peg |
| D. | moving target |
| Answer» C. crawling peg | |
| 219. |
Which among the following could be said to be an 'Open Economy'? |
| A. | A nation that follows the doctrine of Free-market and Laissez-faire economics |
| B. | A nation that trades with other nations in goods and services and financial assets |
| C. | An economy that operates without government intervention |
| D. | None of the above |
| Answer» A. A nation that follows the doctrine of Free-market and Laissez-faire economics | |
| 220. |
The records of exports and imports in goods and services and transfer payments is known as |
| A. | Current account |
| B. | Budget surplus |
| C. | Economic leakage |
| D. | degree of openness |
| Answer» A. Current account | |
| 221. |
The ratio of foreign rates to domestic rates measured in the 'same' currency is known as: |
| A. | Real exchange rate |
| B. | Nominal exchange rate |
| C. | Superfluous exchange rate |
| D. | None of the above |
| Answer» A. Real exchange rate | |
| 222. |
Which among the following is taken as the real measure of a country's international competitiveness? |
| A. | Real exchange rate |
| B. | Nominal exchange rate |
| C. | Superfluous exchange rate |
| D. | None of the above |
| Answer» A. Real exchange rate | |
| 223. |
When the exchange rate is determined by the market forces of demand and supply, it is known as : |
| A. | Real exchange rate |
| B. | Nominal exchange rate |
| C. | Superfluous exchange rate |
| D. | Floating exchange rate |
| Answer» D. Floating exchange rate | |
| 224. |
The Gold Standard was prevalent in the world from: |
| A. | 15th century to 18th century |
| B. | 9th century to 18th century |
| C. | From 1870 till First World War |
| D. | From 1670 till First World War |
| Answer» C. From 1870 till First World War | |
| 225. |
An increase in foreign income generally leads to: |
| A. | increased exports, increased domestic output |
| B. | decreased exports, increased domestic output |
| C. | decreased exports, decreased domestic output |
| D. | increased exports, decreased domestic output |
| Answer» A. increased exports, increased domestic output | |
| 226. |
What records a country's transactions (made by individuals, firms and government bodies.) with the rest of the world? |
| A. | Trade deficit |
| B. | Capital Budget |
| C. | Foreign imports |
| D. | Balance of Payments or BoP |
| Answer» D. Balance of Payments or BoP | |
| 227. |
Under a fixed exchange rate system, a contractionary fiscal policy leads to a worsening in a nation’s balance-of-payments position if the resulting: |
| A. | Trade-account deficit more than offsets the capital-account surplus |
| B. | Trade-account deficit more than offsets the capital-account deficit |
| C. | Capital-account deficit more than offsets the trade-account surplus |
| D. | Capital-account deficit more than offsets the trade-account deficit |
| Answer» C. Capital-account deficit more than offsets the trade-account surplus | |
| 228. |
Given a system of floating Exchange rates, falling income in the United States would trigger: |
| A. | An increase in the demand for imports and an increase in the demand for foreign currency |
| B. | An increase in the demand for imports and a decrease in the demand for foreign currency |
| C. | A decrease in the demand for imports and an increase in the demand for foreign currency |
| D. | A decrease in the demand for imports and a decrease in the demand for foreign currency |
| Answer» D. A decrease in the demand for imports and a decrease in the demand for foreign currency | |
| 229. |
Under a system of floating Exchange rates, relatively low productivity and high inflation rates in the United States result in: |
| A. | An increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciación in the dollar |
| B. | An increase in the demand for foreign currency, an increase in the supply of foreign currency, and an appreciation in the dollar |
| C. | A decrease in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciation in thedollar |
| D. | A decrease in the demand for foreign currency, an increase in the supply of foreign currency, and an appreciation in the dollar |
| Answer» A. An increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciación in the dollar | |
| 230. |
Which example of market expectations causes the dollar to appreciate against the yen? Expectations that the U.S. economy will have: |
| A. | Faster economic growth tan Japan |
| B. | Higher future interest rates than Japan |
| C. | More rapid money supply growth tan Japan |
| D. | Higher inflation rates than Japan |
| Answer» B. Higher future interest rates than Japan | |
| 231. |
Starting at the point of equilibrium between the money supply and the money demand, an increase in the domestic money supply causes the value of the home currency to: |
| A. | Depreciate relative to other currencies |
| B. | Appreciate relative to other currencies |
| C. | Not change relative to other currencies |
| D. | None of the above |
| Answer» A. Depreciate relative to other currencies | |
| 232. |
An Exchange rate is said to __________ when its short-run response to a change in market Fundamentals is greater than its long-run response. a |
| A. | Overshoot |
| B. | Undershoot |
| C. | Depreciate |
| D. | Appreciate |
| Answer» A. Overshoot | |
| 233. |
Concerning exchange-ratedetermination, “market fundamentals” include all of the Following except: |
| A. | Monetary policy and fiscal policy |
| B. | Profitability and riskiness of investments |
| C. | Speculative opinión about future Exchange rates |
| D. | Productivity changes affecting production costs |
| Answer» C. Speculative opinión about future Exchange rates | |
| 234. |
In the short run, Exchange rates respond tomarketforcessuch as: |
| A. | Inflation rates |
| B. | Expectations of future Exchange rates |
| C. | Investment profitability |
| D. | Government trade policy |
| Answer» B. Expectations of future Exchange rates | |
| 235. |
Long-run Exchange ratemovements are governed by all of the following except: |
| A. | National productivity levels |
| B. | Consumer tastes and preferences |
| C. | Rates of inflation |
| D. | Interest rate levels |
| Answer» D. Interest rate levels | |
| 236. |
That identical godos should cost the same in all nations, assuming tis costless to ship godos between nations and there are no barriers to trade, is a reflection of the: |
| A. | Monetary approach to exchange-rate determination |
| B. | Law of one price |
| C. | Fundamentalist approach to exchange-ratedetermination |
| D. | Exchange-rate-overshooting principle |
| Answer» B. Law of one price | |
| 237. |
The quantity of dollars supplied to the foreign Exchange market would increase if, other things remaining equal: |
| A. | Incomerises in Canada |
| B. | Manufacturing productivity increases in Canada |
| C. | Prices decrease in Canada |
| D. | Import tariffs rise in Canada |
| Answer» A. Incomerises in Canada | |
| 238. |
The Gold Standard was prevalent in the world from: |
| A. | 15th century to 18th century |
| B. | 9th century to 18th century |
| C. | From 1870 till First World War |
| D. | From 1670 till First WorldWar |
| Answer» C. From 1870 till First World War | |
| 239. |
When was the International Monetary Fund (IMF) set up? |
| A. | 1912 |
| B. | 1214 |
| C. | 1942 |
| D. | 1944 |
| Answer» D. 1944 | |
| 240. |
If there is an increase in the trade deficit, there must be |
| A. | An increase in the current account. |
| B. | An increase in the capital account. |
| C. | a decrease in the capital account. |
| D. | An increase in net transfers in the current account. |
| Answer» B. An increase in the capital account. | |
| 241. |
To financelarge U.S. federal Budget deficits, the Federal Reserve increases the money supply. This leads to a surplus of dollars world wide. What happens to the U.S. dollar and trade? |
| A. | The dollar appreciates in value, stimulating imports but curtailing exports. |
| B. | The dollar appreciates in value, stimulating exports but curtailing imports. |
| C. | The dollar depreciates in value, stimulating imports but curtailing exports. |
| D. | The dollar depreciates in value, stimulating exports but curtailing imports. |
| Answer» D. The dollar depreciates in value, stimulating exports but curtailing imports. | |
| 242. |
The Federal Reserve raises interestrates. What happens in the foreign Exchange market? |
| A. | Capital flows into the United States from other countries. |
| B. | Capital flows out of the United States in to other countries. |
| C. | The U.S. dollar depreciates. |
| D. | Thereis no change in the foreign Exchange market |
| Answer» A. Capital flows into the United States from other countries. | |
| 243. |
If the dollar depreciates, this likely will cause |
| A. | U.S. aggregate supply to rise in the short run and rise in the longrun. |
| B. | U.S. aggregate supply to rise in the short run but fall in the longrun. |
| C. | U.S. aggregate supply to fall in the short run and fall in the longrun. |
| D. | U.S. aggregate supply to fall in the short run but rise in the longrun |
| Answer» B. U.S. aggregate supply to rise in the short run but fall in the longrun. | |
| 244. |
Ifthe U.S. dollar depreciates against the British pound, what is likely to happen? |
| A. | British people will buy more American goods. |
| B. | Americans will buy more British goods. |
| C. | Americans will take more vacations in Britain. |
| D. | British people will stop vacationing in Florida |
| Answer» A. British people will buy more American goods. | |
| 245. |
Exchange rates are flexible and fiscal policy is held constant. An expansionary monetary policywill be |
| A. | Reinforce dbyan open economy. |
| B. | Mitigated byan open economy. |
| C. | Unaffected byan open economy. |
| D. | Multiplied byan outflow of gold. |
| Answer» A. Reinforce dbyan open economy. | |
| 246. |
Exchange rates are flexible and fiscal policy is held constant. A Contractionary monetary policywill be |
| A. | Reinforced byan open economy. |
| B. | Mitigated byan open economy. |
| C. | Unaffected byan open economy. |
| D. | Multiplied bya noutflow of gold. |
| Answer» A. Reinforced byan open economy. | |
| 247. |
In a floating exchange rate system: |
| A. | The government intervenes to influence the exchange rate |
| B. | The exchange rate should adjust to equate the supply and demand of the currency |
| C. | The Balance of Payments should always be in surplus |
| D. | The Balance of payments will always equal the government budget |
| Answer» B. The exchange rate should adjust to equate the supply and demand of the currency | |
| 248. |
To prevent the external value of its currency rising the government could: |
| A. | Sell its own currency |
| B. | Increase interest rates |
| C. | Buy its own currency |
| D. | Sell foreign currency |
| Answer» A. Sell its own currency | |
| 249. |
A fall in the external value of a currency: |
| A. | May cause an outward shift in the demand for the currency |
| B. | May cause an inward shift in the supply for the currency |
| C. | May lead to a movement along the demand curve for a currency |
| D. | May be due to an increase in demand for the country's export |
| Answer» C. May lead to a movement along the demand curve for a currency | |
| 250. |
Which of the following is NOT an argument for a country allowing its currency to float freely? |
| A. | It allows the country to have sovereignty over its currency. |
| B. | It enables a country to allow its currency to depreciate if it faces balance of payments deficits. |
| C. | It gives greater certainty to firms involved in trade in terms of future revenues. |
| D. | It enables a country to have greater control over its fiscal and monetary policies. |
| Answer» C. It gives greater certainty to firms involved in trade in terms of future revenues. | |
| 251. |
Starting from a position of internal and external balance, a reduction in aggregate demand will cause a current account _____________ |
| A. | deficit |
| B. | surplus |
| C. | revaluation |
| D. | devaluation |
| Answer» B. surplus | |
| 252. |
A rise in the real exchange rate will ____________ the competitiveness of the domestic economy |
| A. | increase |
| B. | reduce |
| C. | do nothing to |
| D. | none |
| Answer» B. reduce | |
| 253. |
Within the circular flow of income, an increase in domestic income will tend to increase |
| A. | exports |
| B. | taxes |
| C. | inventories |
| D. | imports |
| Answer» D. imports | |
| 254. |
Perfect international capital mobility suggests that international funds will be responsive to _____________ differentials |
| A. | current account |
| B. | interest rate |
| C. | tax |
| D. | price |
| Answer» B. interest rate | |
| 255. |
When capital mobility is perfect, interest rate differentials will tend to be offset by ________ |
| A. | price differences |
| B. | balance of payments differences |
| C. | current account differences |
| D. | expected exchange rate changes |
| Answer» D. expected exchange rate changes | |
| 256. |
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 | |
| 257. |
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 | |
| 258. |
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 | |
| 259. |
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 | |
| 260. |
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 | |
| 261. |
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 | |
| 262. |
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 | |
| 263. |
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 | |
| 264. |
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 | |
| 265. |
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 | |
| 266. |
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 | |
| 267. |
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 | |
| 268. |
In Autarchy a nations PPC also shows its |
| A. | consumption function |
| B. | sales frontier |
| C. | profit frontier |
| D. | factor endowment |
| Answer» A. consumption function | |
| 269. |
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. | |
| 270. |
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 | |
| 271. |
“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 | |
| 272. |
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 | |
| 273. |
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 | |
| 274. |
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 | |
| 275. |
BOP includes |
| A. | current account |
| B. | capital account |
| C. | official reserve account |
| D. | all the above |
| Answer» D. all the above | |
| 276. |
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 | |
| 277. |
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. | |
| 278. |
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. | |
| 279. |
“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 | |
| 280. |
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 | |
| 281. |
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 | |
| 282. |
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 | |
| 283. |
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 | |
| 284. |
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. | |
| 285. |
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 | |
| 286. |
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 | |
| 287. |
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 | |
| 288. |
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. | |
| 289. |
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 | |
| 290. |
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 | |
| 291. |
Reciprocal Demand Curve is another name for |
| A. | demand curve |
| B. | laffer curve |
| C. | phillips curev |
| D. | offer curev |
| Answer» D. offer curev | |
| 292. |
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 | |
| 293. |
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 | |
| 294. |
------------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 | |
| 295. |
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. | |
| 296. |
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. | |
| 297. |
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 | |
| 298. |
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 | |
| 299. |
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 | |
| 300. |
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. | |
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