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PPSC Economics Chapter 5 International Economics MCQs With Answers
Question # 1
That the division of labor is limited by the size of th market best applies to which explanation of trade.
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Factor endowment theory
Product like cycle theory
Economics of scale theory
Over lapping demand theory
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Question # 2
According the Hacksher-Ohlin model the source of comparative advantage is a country's
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Technology
Advertising
Factor endowments
both a and c
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Question # 3
increase foreign competition tend to.
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Intensify inflationary pressure at home
Induce falling output per worker hour for domestic workers
Place constraints on the wages of domestic workers
Increase profits of domestic import competing industries.
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Question # 4
The national security argument for protection is more likely to be valid when
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The purpose is to maintain protection for an indefinite time period.
The industry is characterized by increasing returns to scale.
the economy operates during a recession
The protected industry provides invaluable goods during periods of war
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Question # 5
The exchange rate is kept the same across geographically separate markets by
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Hedging
Speculation
Government regulation
Arbitrage
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Question # 6
When imports from a higher cost supplier with in customs union replace imports from a lower cost supplier outside the custom union, there exists.
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Trade creation
Trade diversion
Dynamic welfare effects
Comprehensive welfare efffects
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Question # 7
The difference between bid rates and ask rates is called the
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Profit
Arbitrage
Spread
Forward transaction
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Question # 8
A tariff can ___________ raise a country's welfare
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Never
Sometimes
always
None of the above
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Question # 9
The arrangement where goods imported from trading partners in the developing world are subject to lower tariff rates than goods from other countries is referred to as.
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Normal trade relation status
Most favored nation status
Most favored nation status
Generalized system of preferences
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Question # 10
Wassily Leontief used an input output table in order to test the.
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Richardian theory of comparative advantage
Heckscher Ohlin theory of comparative advantage.
Linder theory of overlapping demand
All of the above
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Question # 11
All of the following are credit items in the balance of payments except.
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Investment inflows
Merchandise exports
Payment for American service's to foreigners
Private give to foreign residents
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Question # 12
The earliest statement of the principle of comparative advantage in associated with
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Adam Smith
David Ricardo
E . Heckscher
Bertil Ohlin
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Question # 13
A tax of 18 cents per unit of imported cheese would be an example of a.
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Compound tariff
Effective tariff
Ad valorem tariff
Specific tariff
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Question # 14
If the international terms of trade settle at a level that is between each country's opportunity cost.
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There is no basis for gainful trade for either country
Both countries gain from trade
Only one country gains from trade
One country gains and the other country loses from trade
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Question # 15
The Hecksher Ohlin theory explains comparative advantage as the result of difference in countries.
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Relative abundance of various resources.
Relative costs of labor
Economies of large scale production.
Research and development expenditures.
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Question # 16
International trade in good sand services is sometimes used as a substitute for all of the following except.
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Internationals movement of capital
International movement of labor
International movements of technology
Domestic production of different goods and services.
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Question # 17
A widely used indicator to differentiate developed countries from developing countries is.
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International trade per captia
Real income per capita
Unemployment per capita
Calories per capita
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Question # 18
The theory of ___________ suggests that government can assist domestic companies in capturing economic profits from foreign competitors
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International dumping
Countervailing duties
Strategic trade policy
Export promotion policy
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Question # 19
If a country has a linear production possibilities frontier then production is said to be subject to.
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Constant opportunity costs
Decreasing opportunity costs
First increasing and then decreasing opportunity costs
Increasing opportunity costs
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Question # 20
The least common type of transaction in the foreign exchanges is a.
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Forward transaction
Spot transaction
Swap transaction
None of the above
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Question # 21
Quotas are government imposed limits on the ___ of goods trade between countries.
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Prices
Quantity
Revenue
Costs
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