Top 250+ Solved International Economics MCQ Questions Answer
Q. A tax of 20 cents per unit of imported cheese would be an example of a (an):
a. Compound tariff
b. Effective tariff
c. Ad valorem tariff
d. Specific tariff
Q. A sudden shift from import tariffs to free trade may induce short-term unemploymentin:
a. Import-competing industries
b. Industries that are only exporters
c. Industries that sell domestically as well as export
d. Industries that neither import nor export
Q. The movement to free international trade is most likely to generate short-termunemployment in which industries?
a. Industries in which there are neither imports nor exports
b. Import-competing industries
c. Industries that sell to domestic and foreign buyers
d. Industries that sell to only foreign buyers
Q. Suppose the government grants a subsidy to domestic producers of an import-competing good. The subsidy tends to result in deadweight losses for the domestic economy in the form of the:
a. Consumption effect
b. Redistribution effect
c. Revenue effect
d. Protective effect
Q. Tariffs and quotas on imports tend to involve larger sacrifices in national welfare than would occur under domestic subsidies. This is because, unlike domestic subsidies, import tariffs and quotas:
a. Permit less efficient home production
b. Distort choices for domestic consumers
c. Result in higher tax rates for domestic residents
d. Redistribute revenue from domestic producers to consumers
Q. Suppose the government grants a subsidy to its export firms that permits them to charge lower prices on goods sold abroad. The export revenue of these firms would rise if the foreign demand is:
a. Elastic in response to the price reduction
b. Inelastic in response to the price reduction
c. Unit elastic in response to the price reduction
d. None of the above
Q. Because export subsidies tend to result in domestic exporters charging lower prices ontheir goods sold overseas, the home country’s:
a. Export revenues will decrease
b. Export revenues will rise
c. Terms of trade will worsen
d. Terms of trade will improve
Q. Which trade restriction stipulates the percentage of a product’s total value that must beproduced domestically in order for that product to be sold domestically?
a. Import quota
b. Orderly marketing agreement
c. Local content requirement
d. Government procurement policy
Q. The imposition of a domestic content requirement by the United States would cause consumer surplus for Americans to:
a. Rise
b. Fall
c. Remain unchanged
d. None of the above
Q. Domestic content legislation applied to autos would tend to:
a. Support wage levels of American autoworkers
b. Lower auto prices for American autoworkers
c. Encourage American automakers to locate production overseas
d. Increase profits of American auto companies
Q. Compared to an import quota, an equivalent tariff may provide a less certain amount ofprotection for home producers since:
a. A tariff has no deadweight loss in terms of production and consumption
b. Foreign firms may absorb the tariff by offering exports at lower prices
c. Tariffs are effective only if home demand is perfectly elastic
d. Quotas do not result in increases in the price of the imported good
Q. A tariff:
a. Increases the volume of trade
b. Reduces the volume of trade
c. Has no effect on volume of trade
d. (a) and (c) of above
Q. A tariff is:
a. A restriction on the number of export firms
b. Limit on the amount of imported goods
c. Tax and imports
d. and (c) of above
Q. It is drawback of protection:
a. Consumers have to pay higher prices
b. Producerrs get higher profits
c. Quality of goods may be affected
d. All of the above
Q. It is drawback of free trade:
a. Prices of local goods rise
b. Government looses income from custom duties
c. National resources are underutilized
d. (a) and (b) of above