PPSC Economics Topic 5 International Economics With Answers

PPSC Economics Topic 5 International Economics

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1 Intra industry trade therory. Explains why the United States might export autos and import clothing Explains why the united states might export and import differentiated versions of the same product such as different type of autos. Assumes that transport costs are very low or do not exist Ignores seasonal considerations for agricultural goods
2 That the division of labor a limited by the size of the market best applies to which explanation of trade Factor endowment theory Product life cycle theory<div><br></div> Economies of scale theory Over lapping demand theory.
3 Should international transpiration costs decrease, the effect on international trade would include a. Increase in the volume of trade smaller gain from trade Decline in the income of home producers Decrease in the level of specialization production.
4 According to the________ the export of the product that embodies large amounts of the relatively cheap, abundant resorce results in an increase in its price and income of the resource used intensively in the import competing product decrease as its demand falls. Ricardian equivalence theorem Smithian equivalence theorem Stolpher Samuelson theorem Bemanke Greenspan theorem
5 According to the factor endowment model of Hackshcer and Ohlin countries heavily endowed with land will. Devote excessive amounts of resources to agricultural production. Devote insufficient amounts of resources to agricultural production Export products that are and intensive. Import products that are land intensive
6 The trade model of the Swedish economists Hackscher and Ohlin maintains that. Absolute advantage determines the distribution of the gain from trade Comparative advantage determines the distribution of the gains from trade. The division of labor is limited by the size of the world market A country exports goods for which its resource endowment are most suited.
7 The theory of overlapping demands predicts that trade in manufactured goods is unimportant for countries with very different. Tastes and preferenes Expectations of future interest rate levels Per capita income levels Labor productivities
8 Which trade theory contends that a country that initially develops and exports a new product may eventually become an importer of it and may no lorger manufacture the product. Theory of factor endearments Theory of overlapping demands Economies of scale theory Product life cycle theory.
9 The factor endearment model of international trade was developed by. Adam Smith David Ricardo John Stuart Mill Eli Heckscher and Beril Ohlin
10 The Hecksher Ohlin theory explains comparative advantage as the result of difference in countries. Relative abundance of various resources. Relative costs of labor Economies of large scale production. Research and development expenditures.
11 Dynamic gains from trad could result from The stimulus of additional investment spending as markets open Economies of large scale production as markets open Additional competition made possible by the opening of markets All of the above
12 The term of trade is given by theprices. Paid to all goods exported by the home country Received for all goods exported by the home country Received for exports and paid for imports. Of primary products as opposed to manufactured products.
13 If a country has a linear production possibilities frontier then production is said to be subject to. Constant opportunity costs Decreasing opportunity costs First increasing and then decreasing opportunity costs Increasing opportunity costs
14 If a country has a bowed out production possibility frontier then production is said to be subject to. Constant opportunity costs Decreasing opportunity costs First increasing and than decreasing opportunity costs Increasing opportunity costs
15 Comparative advantage is determined by Actual difference in labor productivity between countries. Relative difference in labor productivity between countries. Both a and b Neither a nor b
16 Absolute advantage is determined by Actual difference in labor productivity between countries. Relative difference in labor productivity between countries. Both a and b Neither a nor b
17 In the classical model of Ricardo the direction of trade is determined by Absolute advantage Comparative advantage Physical advantage Which way the wind blows
18 The gain from international trade are closely related to. the labor theory of value How much the autarky price differs from international terms of trade change. The fact that a country must lose from trade All of the above
19 Mercantilism. Is the philosophy of free international trade. Was a system of export promotion and barriers to imports practiced by government . Was praised by Adam Smith in the Wealth of Nations Both a and c
20 International trade is based o the notion that. Different currencies are an obstacle to international trade Goods are more mobile internationally than are resources Resources are more mobile internationally that are goods A country's exports should always exceeds its imports
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