PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

Sr. # Questions Answers Choice
1 Advocates of industrial policy maintain that government should. Purse free trade as a policy that leads to maximum global efficiency Grant subsides to firms offering potential comparative advantage. Provide loans to domestic workers in exporting industries. Increase interest rates on loans made to firms in import competing industries.
2 According to the Heckscher - Ohlin model <sup>Every one automatically gains from trade</sup> The gainers from trade out number the losers from trade The scarce factor necessary gains from trade None of the above
3 Wassily Leontief used an input output table in order to test the. Richardian theory of comparative advantage Heckscher Ohlin theory of comparative advantage. Linder theory of overlapping demand All of the above
4 If tastes are identical between countries then comparative advantage is determined by Supply conditions only Demand conditions only Supply and demand conditions Can't tell without more information.
5 Industrial policies intended to foster comparative advantage for domestic industries could result in the implementation of. Research and development subsides. Loan guarantees Low interest rate loans All of the above
6 The _____ analyzes the income distribution effects of trade in the short run when resources are immobile among industries. Stolpher Samuelson theory Factor endowment theory. Specific factor theory Over lapping demand theory
7 According the Hacksher-Ohlin model the source of comparative advantage is a country's Technology Advertising Factor endowments both a and c
8 That the division of labor is limited by the size of th market best applies to which explanation of trade. Factor endowment theory Product like cycle theory Economics of scale theory Over lapping demand theory
9 Should international transpiration costs decrease the effect on international trade would include a. Increases in the volume of trade Smaller gain from trade Decline in the income of home producers Decrease in the level of specialization in production.
10 The product cycle theory of trade is essentially a Static short run trade theory Dynamic, long run trade theory Zero sum theory of trade Negative sum theory of trade
11 The comparative advantage model of Ricardo was based on. Interindustry specialization and trade Interindustry specialization and trade Demand conditions underlying specialization and trade Income conditions underlying specialization and trade
12 According to the Hackscher - Ohlin model the source of comparative advantage is a country's Technology Advertising Factor endowments both a and c
13 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
14 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.
15 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.
16 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
17 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
18 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.
19 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
20 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.
21 The factor endearment model of international trade was developed by. Adam Smith David Ricardo John Stuart Mill Eli Heckscher and Beril Ohlin
22 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.
23 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
24 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.
25 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
26 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
27 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
28 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
29 In the classical model of Ricardo the direction of trade is determined by Absolute advantage Comparative advantage Physical advantage Which way the wind blows
30 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
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