PPSC Economics Topic 5 International Economics With Answers

PPSC Economics Topic 5 International Economics

Sr. # Questions Answers Choice
1 If the international terms of trade settle at a level that is between each country's opportunity cost. 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
2 The earliest statement of the principle of comparative advantage in associated with Adam Smith David Ricardo E . Heckscher Bertil Ohlin
3 A sudden shift from import tariffs to free trade may induce short term unemployment in. Import competing industries Industries that are only exporters Industries that sell domestically as well as export Industries that neither import nor export
4 International trade in goods and services tends to Increase all domestic costs and prices Keep all domestic costs and prices at the same level Lessen the amount of competition facing home manufactures. Increase the amount of competition facing home manufacturers
5 A feasible effect of international trade is that a Monopoly in the home market become an oligopoly in the world market Oligopoly in the home market becomes a monopoly in the world market Purely competitive firm in the home market becomes an oligopolistic Purely competitive firm in the home market becomes a monopolist
6 increase foreign competition tend to. 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.
7 International trade is based on the idea that Exports should exceed imports Imports should exceed exports Resources are more mobile internationally than are goods Resources are less mobile internationally than are goods
8 The movement to free international trade is most likely to generate short term unemployment in which industries'. Industries in which there are neither imports nor exports Import competing industries. Industries that sell to domestic and foreign buyers Industries that sell to only foreign buyers
9 International trade forces domestic firms to become more completive in terms of. The introduction of new products Product design and quality Product price All of the above
10 If a nation has an open economy it means that the nation. Allows private ownership of capital Has flexible exchange rates Has fixed exchange rates Conducts trade with other countries
11 International trade in good sand services is sometimes used as a substitute for all of the following except. Internationals movement of capital International movement of labor International movements of technology Domestic production of different goods and services.
12 A main advantage of specialization results from Economics of large scale production The specializing country behaving as a monoploidy. smaller production runs resulting in lower unit costs High wages paid to foreign workers
13 A primary reason why nations conduct international trade is because. some nations prefer to produce one thing while others produce another. Resources are not equally distributed to all trading nations Trade enhances opportunities to accumulate profits Interest rates are not identical in all trading nations
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