Top 250+ Solved International Economics MCQ Questions Answer
Q. A key effect of devaluation is that it
a. makes the domestic currency cheaper relative to other currencies.
b. makes the domestic currency dearer relative to other currencies.
c. makes the foreign currency cheaper relative to other currencies.
d. leaves the relative value unchange
Q. Devaluation leads to
a. increasing the price of imports and stimulating greater demand for domestic products.
b. domestic inflation.
c. rise in domestic interest rates.
d. all the above
Q. Recardo’s Law of Comparitive advantage is based on
a. labour theory of value
b. opportunity cost
c. law of diminishing returns
d. all the above
Q. The exchange rate system that is followed in India is
a. fixed exchange rate system
b. flexible exchange rate system
c. managed float system
d. non of the above
Q. Pure theory of international trade is termed so because
a. it is based on unrealistic assumptions
b. it concentrates on static gains
c. monetary approaches are absent in them
d. it is based on deductive reasoning
Q. Which among the following is true with regard to the PPP theory?
a. greater transportation costs and trade restrictions are between countries, the less likely for the costs of market baskets to be equalized.
b. costs of non tradable inputs are not taken into consideration by ppp.
c. it is based on the concept of law of one price
d. all the above
Q. law of one price prevails when
a. transportation costs, barriers to trade (import-export levies, customs dutyet c) and other transaction costs (currency conversion fee) are insignificant.
b. there must be competitive markets for the goods and services in both countries.
c. the loop applies only to tradable goods. loop is not applicable to immobile goods such as houses and many services that are local in nature.
d. all the above
Q. ______________ is a summary statement of all economic transactions of the residents of a nation with the residents of Rest of the World (ROW) during aparticular period of time.
a. balance of payment
b. capital account
c. official reserve account
d. net exports
Q. Which among the following are differences between Balance of Trade andBalance of Payment?
a. balance of trade is defined as \difference between export and import of goods and services\ while balance of payment includes not only import and export of goods and services but also financial / capital transfer.
b. bot = net earning on exports - net payment made for imports while bop = current account + capital account + or - balancing item ( errors and omissions)
c. bot need not be in balance always while bop needs to be in balance
d. all the above
Q. If Debit balance in the balance of payment accounts are greater than the Creditbalance it leads to
a. balance of payment surplus.
b. balance of payment deficit
c. chronic disequilibrium in bop
d. non of the above
Q. When each international transaction undertaken by the residents of a country areentered as a debit and credit entry of equal size, into the balance of payments, the method is known as.
a. balance ot trade
b. balance of payment
c. double entry bookkeeping
d. non of the above
Q. Which among the following best explains the difference between Trade inInvisibles and merchandise trade?
a. invisible trade is much more hetnogenious than the merchandise.
b. invisibles trade includes shipping, banking and insurance services and payments by residents as tourists abroad. trade in merchandise include the export and import of goods only.
c. the net of exports and import of visible in balance of payment accounts is called the merchandise trade balance. the net of exports and import of invisibles or services in balance of payment accounts is called the services trade balance.
d. all the above.
Q. _______________are receipts which the residents of a country receive for free,without making any present or future service transaction in return.
a. grants
b. external borrowings
c. unilateral transfers
d. non of the above
Q. The _______________ records all international financial transactions that involve resident of the country concerned- changing either his assets with or his liabilitiesto a resident of another country.
a. current account
b. capital account
c. official reserve account
d. unilateral transfers.
Q. Official reserves consist of
a. gold,
b. special drawing rights (sdrs) borrowed from the imf,
c. holding of foreign convertible currencies.
d. all the above