Top 250+ Solved International Economics MCQ Questions Answer
Q. Many countries were fixing the price of their currency in terms of gold:
a. Before World War I.
b. During World War I.
c. After World War II.
d. During World War II.
Q. How are international trade policies governed?
a. By the IMF.
b. They are not governed by anyone.
c. By the GATT.
d. By the U.N.
Q. Which of the following is NOT true regarding international capital markets?
a. There are special regulations in many countries with respect to foreign investment.
b. The volume of trade on capital markets is lower ever since the "debt crisis" of 1982.
c. Nations can default on their debt and may not be brought to court.
d. Currency fluctuations add instability.
Q. In his empirical test of comparative advantage, Wassily Leontief found that
a. U.S. exports are capital intensive relative to U.S. imports
b. U.S. imports are labor intensive relative to U.S. exports
c. U.S. exports are neither labor nor capital intensive
d. None of the above
Q. By adjusting the model of comparative advantage to include transportation costs along with production costs, we would expect
a. the prices of traded goods to be lower than when there are no transportation costs
b. specialization to stop when the production costs of the trading partners equalize
c. the volume of trade to be less than when there are no transportation costs
d. the gains from trade to be greater than when there are no transportation costs.
Q. Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land. Note that wages are the returns to labor and rents are the returns to land. According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B.
a. Wages and rents should fall in Country A
b. Wages and rents should rise in Country A
c. Wages should rise and rents should fall in Country A
d. Wages should fall and rents should rise in Country A
Q. Trade between two countries can benefit both countries if
a. Each country exports that good in which it has a comparative advantage.
b. Each country enjoys superior terms of trade.
c. Each country has a more elastic demand for the imported goods.
d. Each country has a more elastic supply for the supplied goods.
Q. The Ricardian theory of comparative advantage states that a country has a comparative advantage in widgets if
a. Output per worker of widgets is higher in that country.
b. That country's exchange rate is low.
c. Wage rates in that country are high.
d. The output per worker of widgets as compared to the output of some other product ishigher in that country.
Q. As a result of trade, specialization in the Ricardian model tends to be
a. Complete with constant costs and with increasing costs.
b. Complete with constant costs and incomplete with increasing costs.
c. Incomplete with constant costs and complete with increasing costs.
d. Incomplete with constant costs and incomplete with increasing costs.
Q. A nation engaging in trade according to the Ricardian model will find its consumption bundle
a. Inside its production possibilities frontier.
b. On its production possibilities frontier.
c. Outside its production possibilities frontier.
d. Inside its trade-partner's production possibilities frontier.
Q. In the Ricardian model, if a country's trade is restricted, this will cause all except which?
a. Limit specialization and the division of labor.
b. Reduce the volume of trade and the gains from trade
c. Cause nations to produce inside their production possibilities curves
d. May result in a country producing some of the product of its comparative Disadvantage
Q. If a very small country trades with a very large country according to the Ricardianmodel, then
a. The small country will suffer a decrease in economic welfare.
b. The large country will suffer a decrease in economic welfare.
c. The small country will enjoy gains from trade.
d. The large country will enjoy gains from trade.
Q. The following are all assumptions that must be accepted in order to apply theHeckscher - Ohlin Theory, except for one:
a. Countries differ in their endowments of factors of production.
b. Countries differ in their technologies.
c. There are two factors of production.
d. Production is subject to constant returns to scale.
Q. In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in
a. Tastes
b. Military capabilities
c. Size
d. Relative availabilities of factors of production