MCQOPTIONS
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MCQOPTIONS
This section includes 62 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Which of the following is not an argument for protectionism ? |
| A. | To protect infant industries |
| B. | To increase the level of imports |
| C. | To Protect strategic industries |
| D. | To improve the balance of payments |
| Answer» C. To Protect strategic industries | |
| 2. |
Which American industry has least been affected by import competition in recent years ? |
| A. | Automobiles |
| B. | Steel |
| C. | Radios and TVs |
| D. | Computer software |
| Answer» E. | |
| 3. |
When free trade areas are set up the member countries trade with each other grows faster than their trade with other countries This is due to what economist call ? |
| A. | trade diversion |
| B. | trade channeling |
| C. | trade creation and trade diversion |
| D. | trade creation |
| Answer» D. trade creation | |
| 4. |
When countries from large trading blocs like the EU, the size of the bloc has the effect of improving them ? |
| A. | balance of trade |
| B. | comparative advantage |
| C. | balance of payments |
| D. | terms of trade |
| Answer» E. | |
| 5. |
What is not a feature of the EU as a single market ? |
| A. | Elimination of border controls |
| B. | No import taxes on goods bought in another members country |
| C. | Each country can retain its own technical standards |
| D. | Common security arrangements |
| Answer» D. Common security arrangements | |
| 6. |
To prevent the external value of the currency from falling the government might ? |
| A. | Reduce interest rates |
| B. | Sell its own currency |
| C. | Buy its own currency with foreign reserves |
| D. | Increase its own spending |
| Answer» D. Increase its own spending | |
| 7. |
The theory that states that a country has a comparative advantage in the production of a product if that country is relatively well endowed with inputs used intensively in the production of that product is the? |
| A. | Ricardo Malthus theorem |
| B. | Heckscher Ohlin theorem |
| C. | Lucas-Laffer theorem |
| D. | Friedman Samuelson theorem |
| Answer» C. Lucas-Laffer theorem | |
| 8. |
The terms of trade measure ? |
| A. | The income of one country compared to another |
| B. | The GDP of one country compared to another |
| C. | The quantity of exports of one country compared to another |
| D. | Export prices compared to import prices |
| Answer» E. | |
| 9. |
The term tariff, as used in international trade refers to ? |
| A. | The price of goods when they leave the producing country |
| B. | a limit on the quantity of a good that can be imported into a country |
| C. | a tax on imports |
| D. | a government payment to encourage exports |
| Answer» D. a government payment to encourage exports | |
| 10. |
The real income of domestic producers and consumers can be increased by ? |
| A. | Technological progress, but not international trade |
| B. | International trade but not technological progress |
| C. | Technological Progress and international trade |
| D. | Neither technological progress nor international trade |
| Answer» D. Neither technological progress nor international trade | |
| 11. |
The movement to free international trade is most likely to generate short-term unemployment in which industries ? |
| A. | Industries in which there are neither imports nor exports |
| B. | Imports competing industries |
| C. | Industries that sell to domestic and foreign buyers |
| D. | Industries that sell to only foreign buyers |
| Answer» C. Industries that sell to domestic and foreign buyers | |
| 12. |
The most wave of globalization which began in the 1980s has emphasized the outsourcing of ? |
| A. | services and white-collar jobs |
| B. | manufacturing and blue-collar jobs |
| C. | natural resource extraction and mining jobs |
| D. | agriculture and farming jobs |
| Answer» B. manufacturing and blue-collar jobs | |
| 13. |
The marginal propensity of consume is equal to ? |
| A. | Total spending / total consumption |
| B. | Total consumption / total income |
| C. | Change in consumption / change in income |
| D. | Change in consumption / change in savings |
| Answer» D. Change in consumption / change in savings | |
| 14. |
The main cause of different relative costs between countries are ? |
| A. | relative factor competition |
| B. | relative factor mobility |
| C. | relative factor substitution |
| D. | relative factor endowments |
| Answer» E. | |
| 15. |
The level of the equilibrium exchange rate offsets international differences in ? |
| A. | comparative advantage |
| B. | absolute advantage |
| C. | opportunity cost |
| D. | relative costs |
| Answer» C. opportunity cost | |
| 16. |
The largest amount of trade with the United States in recent years has been conducted by ? |
| A. | Canada |
| B. | Germany |
| C. | Mexico |
| D. | United Kingdom |
| Answer» B. Germany | |
| 17. |
The imposition of a tariff causes consumption to _____ and imports to _________? |
| A. | rise, rise |
| B. | fall, rise |
| C. | fall, fall |
| D. | rise, fall |
| Answer» D. rise, fall | |
| 18. |
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 America workers |
| Answer» C. Sluggish rates of productivity growth in the United States | |
| 19. |
Output fell sharply in the transition economies because ? |
| A. | banks were unable to function |
| B. | there was little corporate control |
| C. | vital infrastructure was missing |
| D. | All of the above |
| Answer» E. | |
| 20. |
One of the main advantages of trade economists suggest is ? |
| A. | technological change |
| B. | competitions with foreign suppliers |
| C. | development of tourism |
| D. | lower tariffs |
| Answer» C. development of tourism | |
| 21. |
Major trading partners of the United States including all of the following countries except ? |
| A. | Canada |
| B. | Mexico |
| C. | China |
| D. | North Korea |
| Answer» E. | |
| 22. |
LDCs often have a comparative advantage in the production of ? |
| A. | primary products |
| B. | intermediate products |
| C. | manufactured products |
| D. | financial services |
| Answer» B. intermediate products | |
| 23. |
LDCs are reluctant to pursue development through the export of primary products because of ____ and _____ ? |
| A. | The upward trend in commodity prices the stability of primary products real prices |
| B. | The upward trend in commodity prices, the volatility of primary products real prices |
| C. | The downward trend in commodity prices the stability of primary products real prices |
| D. | The downward trend in commodity prices the volatility of primary products real prices |
| Answer» E. | |
| 24. |
International trade in goods and services is sometimes used as a substitute for all of the following except ? |
| A. | International movements of capital |
| B. | International movements of labor |
| C. | International movements of technology |
| D. | Domestic production of different goods and services |
| Answer» E. | |
| 25. |
International trade tends to cause welfare losses to at least some groups in a country ? |
| A. | The less mobile the country’s resources |
| B. | The more mobile the country’s resources |
| C. | The lower the country’s initial living standard |
| D. | The higher the country’s initial living standard |
| Answer» B. The more mobile the country’s resources | |
| 26. |
International trade is based on the idea that ? |
| A. | Exports should exceed imports |
| B. | imports should exceed exports |
| C. | Resources are more mobile internationally than are goods |
| D. | Resources are less mobile internationally than are goods |
| Answer» E. | |
| 27. |
International trade in goods and services tends to ? |
| A. | Increase all domestic costs and prices |
| B. | Keep all domestic costs and prices at the same level |
| C. | Lessen the amount of competition facing home manufacturers |
| D. | Increase the amount of competition facing home manufacturers |
| Answer» E. | |
| 28. |
International trade forces domestic firms to become more competitive in terms of ? |
| A. | The introduction of new products |
| B. | Product design and quality |
| C. | Product price |
| D. | All of the above |
| Answer» E. | |
| 29. |
International specialization takes place because of______________? |
| A. | differences in technology |
| B. | differences in factor endowments |
| C. | scale economies |
| D. | All of the above |
| Answer» E. | |
| 30. |
International difference is opportunity costs lead to countries acquiring ? |
| A. | Comparative advantage |
| B. | High exchange rates |
| C. | trade barriers |
| D. | trade quotas |
| Answer» B. High exchange rates | |
| 31. |
Increased foreign competition tend to ? |
| A. | Intensify inflationary pressure at home |
| B. | Induce falling output per worker-hour for domestic workers |
| C. | Place constraints on the wages of domestic workers |
| D. | Increase profits of domestic import competing industries |
| Answer» D. Increase profits of domestic import competing industries | |
| 32. |
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» C. The Balance of payments should always be in surplus | |
| 33. |
Import substitution is the replacement of ____ by domestic production _____ protection of ________? |
| A. | exports, subsidies |
| B. | exports, patents |
| C. | imports, high tariffs or import quotas |
| D. | imports, subsidies |
| Answer» D. imports, subsidies | |
| 34. |
If there is a balance of payments deficit then in a floating exchange rate system ? |
| A. | The external value of the currency would tend to fall |
| B. | The external value of the currency would tend to rise |
| C. | The injections from trade are greater then the withdrawals |
| D. | Aggregate demand is increasing |
| Answer» B. The external value of the currency would tend to rise | |
| 35. |
If the Uk placed a limit on the amount of steel that could be imported into the UK in a particular period this would be an example of ? |
| A. | a quota |
| B. | dumping |
| C. | a tariff |
| D. | an export subsidy |
| Answer» B. dumping | |
| 36. |
If goods are exported for less than society’s marginal production cost and the marginal benefit to domestic consumers, it is likely that they benefit from? |
| A. | an import subsidy |
| B. | a quota |
| C. | comparative advantage |
| D. | an export subsidy |
| Answer» E. | |
| 37. |
If a nation has an open economy it means that the nation ? |
| A. | Allows private ownership of capital |
| B. | Has flexible exchange rates |
| C. | Has fixed exchange rates |
| D. | conducts trade with other countries |
| Answer» E. | |
| 38. |
If a group of countries abolish trade barriers between them and set same tariffs on goods coming in from other countries they are a ? |
| A. | common market |
| B. | free trade area |
| C. | customs union |
| D. | federation |
| Answer» D. federation | |
| 39. |
If a country has a burden of debt it cannot sustain it can ? |
| A. | reschedule debt |
| B. | get a loan from an international organization |
| C. | default on the loan |
| D. | any of the above |
| Answer» E. | |
| 40. |
If a country can produce 10 of product A or 4 of product B the opportunity cost of 1B is ? |
| A. | 0.4A |
| B. | 2.5A |
| C. | 10A |
| D. | 1B |
| Answer» C. 10A | |
| 41. |
Government payments made to domestic firms in order to encourage exports are called ? |
| A. | Side payments |
| B. | Tariffs |
| C. | subsidies |
| D. | export quotas |
| Answer» D. export quotas | |
| 42. |
Free traders maintain that an open economy is advantageous is 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 wages levels for all domestic workers |
| Answer» E. | |
| 43. |
Free trade is based on the principle of ? |
| A. | Comparative advantage |
| B. | Comparative scale |
| C. | Economies of advantage |
| D. | Production possibility advantage |
| Answer» B. Comparative scale | |
| 44. |
For the United states, exports plus imports are about _____ of its gross national product? |
| A. | 5 percent |
| B. | 10 percent |
| C. | 25 percent |
| D. | 55 percent |
| Answer» D. 55 percent | |
| 45. |
For the United States, commercial jetliners are ? |
| A. | Imported, but not exported |
| B. | Exported, but not imported |
| C. | Imported and exported |
| D. | Neither exported nor imported |
| Answer» D. Neither exported nor imported | |
| 46. |
For the United States automobiles are ? |
| A. | Imported, but not exported |
| B. | Exported, but not imported |
| C. | Exported and imported |
| D. | Neither imported not exported |
| Answer» D. Neither imported not exported | |
| 47. |
Economists suggest that an optimum tariff would be one which reduce imports to a point where___________? |
| A. | Comparative advantage is achieved |
| B. | Price elasticity of imports is unity and tariff revenue is maximized |
| C. | import prices are the same as export prices |
| D. | marginal social cost equals marginal social benefit |
| Answer» E. | |
| 48. |
Economic transition involves high inflation because _____ and ______? |
| A. | high monetary growth high wages |
| B. | high budget deficits devaluation |
| C. | high monetary growth devaluation |
| D. | Prices surge from an artificially low level to their equilibrium level the inflation tax is required a source of government revenue |
| Answer» E. | |
| 49. |
Economic integration ? |
| A. | occurs when countries are granted most favored nation status |
| B. | occurs when one country voluntarily agrees to reduce its exports to another country |
| C. | occurs when two or more nations join to form a free-trade zone |
| D. | Occurs when countries develop an acquired comparative advantage that makes their industries more competitive in international markets |
| Answer» D. Occurs when countries develop an acquired comparative advantage that makes their industries more competitive in international markets | |
| 50. |
David Ricardo’s theory in favor of free trade uses the ideal of ? |
| A. | absolute advantage |
| B. | mutual advantage |
| C. | multilateral advantage |
| D. | comparative advantage |
| Answer» E. | |