MCQOPTIONS
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MCQOPTIONS
This section includes 200 Mcqs, each offering curated multiple-choice questions to sharpen your Economics (CBCS) knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Community indifference curves have the same characteristics as |
| A. | Transformation curve |
| B. | Offer curve |
| C. | Indifference curve |
| D. | Production possibility curve |
| Answer» D. Production possibility curve | |
| 2. |
The H-O theory assumed the prevalence of |
| A. | Monopolistic forms of market |
| B. | Perfect competition |
| C. | Oligopolistic forms of market |
| D. | Monopoly |
| Answer» C. Oligopolistic forms of market | |
| 3. |
The H-O theory of international trade was propounded by Ohlin in |
| A. | 1932 |
| B. | 1933 |
| C. | 1934 |
| D. | 1935 |
| Answer» C. 1934 | |
| 4. |
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» B. Difference in cost of production | |
| 5. |
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» C. Exchange rate differences | |
| 6. |
Adam Smith favoured |
| A. | Free trade among nations |
| B. | Regulation of trade among nations |
| C. | Closed economies |
| D. | None of the above |
| Answer» B. Regulation of trade among nations | |
| 7. |
The theory of comparative advantage in international trade was propounded by |
| A. | Kindleberger |
| B. | Adam Smith |
| C. | David Ricardo |
| D. | J.S. Mill |
| Answer» D. J.S. Mill | |
| 8. |
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» C. Both capital and labour are factors of production | |
| 9. |
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» B. Homogeneity of labour | |
| 10. |
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» B. Three-by-three-by-three model | |
| 11. |
In Ricardian theory of international trade, the only factor of production is |
| A. | Land |
| B. | Labour |
| C. | Capital |
| D. | All of the above |
| Answer» C. Capital | |
| 12. |
The Absolute Advantage theory of international trade was propounded by |
| A. | Adam Smith |
| B. | David Ricardo |
| C. | Alfred Marshall |
| D. | Lionel Robbins |
| Answer» B. David Ricardo | |
| 13. |
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» D. The supply curve | |
| 14. |
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» B. Tastes | |
| 15. |
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» C. Concave to the origin | |
| 16. |
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» E. | |
| 17. |
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» D. None of the above | |
| 18. |
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» B. Specialisation only at the national level | |
| 19. |
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» D. Mobility of factors | |
| 20. |
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» C. Imperfect competition in factor and commodity markets | |
| 21. |
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» C. One country does not have any advantage in the production of both commodities | |
| 22. |
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» E. | |
| 23. |
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» B. Wage flexibility | |
| 24. |
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» E. | |
| 25. |
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» B. Existence of comparative differences in costs | |
| 26. |
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» D. None of the above | |
| 27. |
International trade refers to |
| A. | Domestic trade |
| B. | Inter-regional trade |
| C. | Trade between two nations or countries |
| D. | Internal trade |
| Answer» D. Internal trade | |
| 28. |
Protection refers to a policy where |
| A. | Export industries are to be protected from competition |
| B. | Domestic industries are to be protected from foreign competition |
| C. | Optimum utilization of resources takes place |
| D. | There is optimization of consumption |
| Answer» C. Optimum utilization of resources takes place | |
| 29. |
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» D. A country will export those commodities in which its comparative production | |
| 30. |
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» C. A country is having labour relatively cheap and capital relatively costly | |
| 31. |
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» E. | |
| 32. |
The full form of EXIM is |
| A. | Exchange and Import |
| B. | Export-Import |
| C. | Exported and Imported |
| D. | None of the above |
| Answer» C. Exported and Imported | |
| 33. |
By restricting imports through the quota system, the deficit is |
| A. | Reduce |
| B. | Increase |
| C. | Improve |
| D. | None of the above |
| Answer» B. Increase | |
| 34. |
A deficit in BOP occurs when |
| A. | Credit>debit |
| B. | Credit<debit |
| C. | Credit=debit |
| D. | None of the above |
| Answer» C. Credit=debit | |
| 35. |
Fundamental disequilibrium is |
| A. | A short-term nature |
| B. | A medium-term nature |
| C. | A long-term nature |
| D. | None of the above |
| Answer» D. None of the above | |
| 36. |
Exports that are estimated on free on board (f.o.b.) basis signifies that |
| A. | the transportation costs, costs of insurance etc. are not included |
| B. | the transportation costs, costs of insurance etc. are included |
| C. | both (a) and (b |
| D. | none of the above |
| Answer» B. the transportation costs, costs of insurance etc. are included | |
| 37. |
in 1991, India devalued its currency by 18 per cent to |
| A. | 19% |
| B. | 20% |
| C. | 21% |
| D. | 22% |
| Answer» C. 21% | |
| 38. |
Deflation as a measure of correcting deficit in BOP tends to make |
| A. | domestic goods relatively cheaper to foreign goods |
| B. | domestic goods relatively dearer to foreign goods |
| C. | foreign goods relatively cheaper to domestic goods |
| D. | foreign goods relatively dearer to domestic goods |
| Answer» B. domestic goods relatively dearer to foreign goods | |
| 39. |
When government imposed tariffs, it results in improvement of |
| A. | Balance of trade situation |
| B. | Balance of payments situation |
| C. | International transactions |
| D. | Domestic transactions |
| Answer» C. International transactions | |
| 40. |
Which of the following is not a type of disequilibrium in BOP? |
| A. | Temporary disequilibrium |
| B. | Fundamental disequilibrium |
| C. | Structural disequilibrium |
| D. | Constant disequilibrium |
| Answer» E. | |
| 41. |
Invisible exports and imports are the component of |
| A. | Current account |
| B. | Capital account |
| C. | Savings account |
| D. | None of the above |
| Answer» B. Capital account | |
| 42. |
Imports that are estimated on carriage, insurance and freight (c.i.f.) basis signifies that |
| A. | the transportation costs, costs of insurance and freight get included. |
| B. | the transportation costs, costs of insurance and freight get excluded. |
| C. | Both (a) and (b |
| D. | None of the above |
| Answer» B. the transportation costs, costs of insurance and freight get excluded. | |
| 43. |
Which of the following statements about the direction of India s foreign trade is correct? |
| A. | The share of Asia and ASEAN in total trade has increased significantly |
| B. | The share of Asia and ASEAN in total trade has decreased significantly |
| C. | The share of Asia and ASEAN remain constant over the years |
| D. | The share of Asia and ASEAN is highly fluctuating |
| Answer» B. The share of Asia and ASEAN in total trade has decreased significantly | |
| 44. |
The Indian rupee was made a freely convertible currency on current account since the year |
| A. | 1981 |
| B. | 1991 |
| C. | 1994 |
| D. | 2004 |
| Answer» D. 2004 | |
| 45. |
NRI deposits are |
| A. | Major source of capital inflows into India |
| B. | Not a source of capital inflows into India |
| C. | Negligible source of capital inflows into India |
| D. | None of the above |
| Answer» B. Not a source of capital inflows into India | |
| 46. |
India s top import item is |
| A. | Coal |
| B. | Gold |
| C. | Fertilizer |
| D. | Crude oil |
| Answer» E. | |
| 47. |
India s top export item is/are |
| A. | Mineral, fuels, oils, etc |
| B. | Gold |
| C. | Precious or semi-precious stones |
| D. | Fertilizers |
| Answer» B. Gold | |
| 48. |
The most important item of import for India in terms of value is |
| A. | Mobile handset |
| B. | POL |
| C. | Gold |
| D. | Electronic goods |
| Answer» C. Gold | |
| 49. |
The biggest exporter of goods to India during 2018-190 is |
| A. | USA |
| B. | UAE |
| C. | China |
| D. | Japan |
| Answer» D. Japan | |
| 50. |
Since the inception of planning era in 1951, India has been facing the problem of |
| A. | Trade deficit |
| B. | Current account deficit |
| C. | Both (a) and (b |
| D. | None of the above |
| Answer» D. None of the above | |