McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Economics (CBCS) .
Chapters
| 1. |
The fundamental reason why different countries involve in transactions with one another is the |
| A. | Theory of absolute differences in costs |
| B. | Production of goods |
| C. | Gains from trade |
| D. | Supply of goods |
| Answer» B. Production of goods | |
| 2. |
If a country has favourable terms of trade, it will claim |
| A. | A larger share in the distribution of gains |
| B. | An equal share in the distribution of gains |
| C. | A smaller share in the distribution of gains |
| D. | None of the above |
| Answer» A. A larger share in the distribution of gains | |
| 3. |
The income terms of trade is |
| A. | The net barter terms of trade of a country multiplied by its export volume index |
| B. | The ratio between the quantities of a country’s imports and exports |
| C. | The ratio between the price of a country’s export goods and import goods |
| D. | None of the above |
| Answer» A. The net barter terms of trade of a country multiplied by its export volume index | |
| 4. |
Which factor does not influence terms of trade? |
| A. | Devaluation |
| B. | Overpopulation |
| C. | Trade policy |
| D. | Immigration |
| Answer» D. Immigration | |
| 5. |
Gains from trade depends on |
| A. | Relative strength of elasticity of demand for export and import good |
| B. | Size of the country |
| C. | Change in technology |
| D. | All of the above |
| Answer» D. All of the above | |
| 6. |
The principle of reciprocal demand was introduced by |
| A. | J.S.Mill |
| B. | Lionel Robbins |
| C. | Alfred Marshall |
| D. | Adam Smith |
| Answer» A. J.S.Mill | |
| 7. |
Terms of trade expresses the relationship between |
| A. | Balance of payments between two countries |
| B. | The export price and import price of a country |
| C. | Gains and loss of a country in international trade |
| D. | None of the above |
| Answer» B. The export price and import price of a country | |
| 8. |
The difference in the domestic cost ratios of producing two commodities in two countries is known as |
| A. | Actual gains |
| B. | Partial gains |
| C. | Potential gains |
| D. | Price gains |
| Answer» C. Potential gains | |
| 9. |
The two types of gains from trade are |
| A. | Internal and external gains |
| B. | Static and dynamic gains |
| C. | Relative and reactive gains |
| D. | All of the above |
| Answer» B. Static and dynamic gains | |
| 10. |
In case of Mill’s theory, where country A produces good X and country B produces good Y, if country A’s demand for product Y increases, then country A’s offer curve will |
| A. | Shift to the left |
| B. | Shift to the right |
| C. | Shift backwards |
| D. | Remain constant |
| Answer» B. Shift to the right | |
| 11. |
The difference in price ratios of two commodities in the two trading countries is |
| A. | Potential gains |
| B. | Partial gains |
| C. | Actual gains |
| D. | None of the above |
| Answer» C. Actual gains | |
| 12. |
The ratio between the quantities of a country’s imports to its exports is known as |
| A. | Commodity or net barter terms of trade |
| B. | Single factoral terms of trade |
| C. | Gross barter terms of trade |
| D. | Double factoral terms trade |
| Answer» C. Gross barter terms of trade | |
| 13. |
J.S.Mill introduced the theory of reciprocal demand to explain |
| A. | Determination of factor endowments |
| B. | Determination of equilibrium terms of trade |
| C. | Determination of availability of resources |
| D. | Determination of equilibrium in balance of payments |
| Answer» B. Determination of equilibrium terms of trade | |
| 14. |
Mill’s theory of reciprocal demand indicates a |
| A. | Country’s demand for one commodity in terms of the quantities of the other country it is prepared to give up in exchange |
| B. | Country’s supply of a commodity in terms of the quantities of the other country it is prepared to give up in exchange |
| C. | Country’s balance of payments |
| D. | Country’s labour cost |
| Answer» A. Country’s demand for one commodity in terms of the quantities of the other country it is prepared to give up in exchange | |
| 15. |
The gains from trade refers to |
| A. | A duty levied on goods when they enter and leave a country’s national boundary |
| B. | A tariff that maximizes a country’s welfare |
| C. | Net benefits or increases in goods that a country gets by trading with other countries |
| D. | The demand and supply curve of a country |
| Answer» C. Net benefits or increases in goods that a country gets by trading with other countries | |
| 16. |
The ratio between the price of a country’s export goods to its import goods is called |
| A. | Income terms of trade |
| B. | Gross barter terms of trade |
| C. | Real cost terms of trade |
| D. | Commodity or net barter terms of trade |
| Answer» D. Commodity or net barter terms of trade | |
| 17. |
An increase in the index of income terms of trade implies that |
| A. | A country cannot import more goods in exchange for its exports |
| B. | A country can import more goods in exchange for its exports |
| C. | A country cannot export more goods in exchange for its imports |
| D. | None of the above |
| Answer» B. A country can import more goods in exchange for its exports | |
| 18. |
The terms of trade refers to the rate |
| A. | At which the goods of one country is exchanged for the goods of another country |
| B. | At which the price of a country’s import is calculated |
| C. | At which the price of a country’s export is calculated |
| D. | All of the above |
| Answer» A. At which the goods of one country is exchanged for the goods of another country | |
| 19. |
The types of terms of trade does not include |
| A. | Utility terms of trade |
| B. | Real cost terms of trade |
| C. | Productive capacity terms of trade |
| D. | Double factoral terms of trade |
| Answer» C. Productive capacity terms of trade | |
| 20. |
In the modern trade theory, the gains from international trade are clearly differentiated between |
| A. | The gains from exchange and the gains from specialization |
| B. | The gains from exchange and income |
| C. | The gains from exchange and price |
| D. | All of the above |
| Answer» A. The gains from exchange and the gains from specialization | |
| 21. |
Under the gains from international trade, the gains from exchange is also known as the |
| A. | Partial gains |
| B. | Consumption gains |
| C. | Domestic gains |
| D. | Price gains |
| Answer» B. Consumption gains | |
| 22. |
In modern trade theory, the gains from specialization is also known as the |
| A. | Constant gains |
| B. | Consumption gains |
| C. | Production gains |
| D. | Internal gains |
| Answer» C. Production gains | |
| 23. |
The terms of trade of a country improves when |
| A. | The import price of a country relatively rises to its export prices |
| B. | The import price of a country is the same with its export prices |
| C. | The export price of a country does not rise in relation to its import prices |
| D. | The export price of a country relatively rises to its import prices |
| Answer» D. The export price of a country relatively rises to its import prices | |
| 24. |
When a country’s import price relatively rises to its export prices, |
| A. | The terms of trade of a country remains the same |
| B. | The terms of trade of a country becomes worsened |
| C. | The terms of trade of a country improves |
| D. | None of the above |
| Answer» B. The terms of trade of a country becomes worsened | |
| 25. |
The various methods of measuring gains from trade does not include |
| A. | Haberler’s approach |
| B. | Ricardo’s-Malthus approach |
| C. | Modern approach |
| D. | Mill’s approach |
| Answer» A. Haberler’s approach | |
| 26. |
According to Jacob Viner, the classical economists measured the gains from trade in terms of |
| A. | Increase in national income |
| B. | Difference in comparative costs |
| C. | Terms of trade |
| D. | All of the above |
| Answer» D. All of the above | |
| 27. |
The classical theorists believed that the gains from trade resulted from |
| A. | Stabilisation of price level |
| B. | Increased production and specialization |
| C. | Exchange and specialization |
| D. | Perfect competition |
| Answer» B. Increased production and specialization | |
| 28. |
The modern economists considered the gains from trade resulted from |
| A. | Increased production and specialization |
| B. | Increased competition |
| C. | Exchange and specialization |
| D. | All of the above |
| Answer» C. Exchange and specialization | |
| 29. |
The concept of single factoral terms of trade was developed by |
| A. | Jacob Viner |
| B. | G.S. Dorrance |
| C. | G.Haberler |
| D. | F.W. Taussig |
| Answer» A. Jacob Viner | |
| 30. |
Mill’s theory of reciprocal demand is based on one of the assumptions that |
| A. | There is less than full employment |
| B. | There is imperfect competition |
| C. | The commodities are produced under the law of constant returns |
| D. | There are transport costs involved |
| Answer» C. The commodities are produced under the law of constant returns | |
| 31. |
When the export prices of a country relatively rises to its import prices, its terms of trade are said to have |
| A. | Deteriorated |
| B. | Improved |
| C. | Remain constant |
| D. | None of the above |
| Answer» B. Improved | |
| 32. |
The concept of gross barter terms of trade was introduced by |
| A. | Jacob Viner |
| B. | Adam Smith |
| C. | Lionel Robbins |
| D. | F.W. Taussig |
| Answer» D. F.W. Taussig | |
| 33. |
A single factoral terms of trade shows that a country’s factoral terms of trade improve as productivity |
| A. | Remains constant in its export industries |
| B. | Improves in its export industries |
| C. | Deteriorates in its export industries |
| D. | Increases in its import industries |
| Answer» B. Improves in its export industries | |
| 34. |
The concept of commodity or net barter terms of trade has been used by economists to measure |
| A. | The gains from domestic trade |
| B. | The gains from internal trade |
| C. | The gains from international trade |
| D. | The gains from prices |
| Answer» C. The gains from international trade | |
| 35. |
The term ‘terms of trade’ between two countries refers to |
| A. | The barter terms of trade |
| B. | The quantity of exports |
| C. | Both (a) and (b |
| D. | The price |
| Answer» A. The barter terms of trade | |
| 36. |
The actual exchange ratio between two countries will depend upon the |
| A. | Supply |
| B. | Price |
| C. | Reciprocal demand |
| D. | All of the above |
| Answer» C. Reciprocal demand | |
| 37. |
In world markets, the actual gain is always less than the potential gain since there is always |
| A. | Perfect completion |
| B. | Imperfect completion |
| C. | Stability |
| D. | None of the above |
| Answer» B. Imperfect completion | |
| 38. |
The theory of gains from trade was at the core of the |
| A. | Technical progress |
| B. | Change in employment |
| C. | Modern theory of international trade |
| D. | Classical theory of international trade |
| Answer» D. Classical theory of international trade | |
| 39. |
Prof. Ronald Findlay modified Ricardo’s measure of gains from trade using |
| A. | A straight line |
| B. | Balance of payments |
| C. | The community indifference curve |
| D. | Short-term and long-term lendings and borrowings |
| Answer» C. The community indifference curve | |
| 40. |
The income terms of trade is called the |
| A. | Capacity to export |
| B. | Capacity to import |
| C. | Capacity to change |
| D. | Capacity to remain constant |
| Answer» B. Capacity to import | |
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