PPSC Economics Chapter 11 Assess Your Basics With Answers

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PPSC Economics Chapter 11 Assess Your Basics

Sr. # Questions Answers Choice
1 If a country has a burden of debt it cannot sustain it can. Reschedule debt Get a loan from an international organization Default on the loan Any of the above
2 import substitution is the replacement of ________ by domestic production under the protection of. exports, subsidies Exports, patents imports, high tariffs or import quotes Imports, subsidies
3 LDC's often have a comparative advantage in the production of. Primary products Intermediate products Manufactured products Financial services.
4 All of the following represent obstacles to LDC development except. Resource scarcity Low level of investment Low population Poor infrastructure
5 Output fell sharply in the transition economies because. Banks were undoable to function There was little corporate control Vital infrastructure was missing All of the above
6 Economic transition involves high inflation because ______ and _____ High monetary growth, high wages. High budget deficits, devaluation High monetary growth, devaluation Prices surge from an artificially low level to their equilibrium level the inflation tax is required as source of government revenue.
7 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. An import subsidy A quota Comparative advantage An export subsidy
8 An optimal tariff is one which reduces imports to the level at which ___ equals imports , exports The balance of trade, zero The demand for currency, the supply of currency Social marginal cost social marginal benefit
9 A tariff causes domestic firms to __________ and consumers to Overproduced, under consume overproduce , overconsume Underproduce, under consume underproduce, overconsume
10 The imposition of a tariff causes consumption to _______ and imports to. rise , rise fall , rise fall , fall rise , fall
11 The level of the equilibrium exchange rate offsets international difference in. Comparative advantage Absolute advantage Opportunity cost Relative costs
12 The main cause of different relative costs between countries are. Relative factors competition Relative factor mobility Relative factor substitution Relative factor endowments
13 International difference in opportunity costs lead to countries acquiring. Comparative advantage High exchange rates Trade exchange rates Trade barriers
14 International specialization takes place because of. Differences in technology Differences in factor endowments Scale economies All of the above
15 Real business cycle theorists argue that ___________ can explain short and long term fluctuations in output. Imperfect labour markets Rational expectations Intertemporal decisions of households firms and government. Sun spot cycles
16 The business cycle is not transmitted from one country to another through. Private sector imports and exports Economic policy The duration of compulsory education Labour supply changes
17 Real business cycle theories suggest that _____ to correct departures from the desired growth path. There is a role of fiscal policy There is a role for monetary policy There is a role for supply side policies There is no case for stabilizing output over the business cycle.
18 Real business cycle are cycles in Potential output Actual output Real output International trade
19 The impossibility of negative gross investment provides a______ to fluctuations in. Celling, stock building Celling, capital prices floor , output floor , the capital output ratio
20 Real business cycle theory suggests that __________ not important in explaining short term fluctuations around actual output. aggregate supply is aggregate demand is Potential output is Real variables are
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