International Economics MCQ with Answers

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Online MCQ Quiz of International Economics

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International Economics

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Q: If Canada runs a current account surplus and exchange rates are floating:

A. The value of other currencies will rise relative to the dollar

B. The dollar will depreciate relative to other currencies

C. The price of foreign goods will become cheaper for Canadians

D. The price of foreign goods will rise for Canadians

2 / 20

Q: Suppose Mexico and the United States were the only two countries in the world. There exists an excess supply of pesos on the foreign exchange market. This suggests that:

A. Mexico's current account is in surplus

B. Mexico's current account is in deficit

C. The U.S. current account is in deficit

D. The U.S. current account is in equilibrium

3 / 20

Q: Debt (-) items in the balance of payments correspond to anything that:

A. Involves receipts from foreigners

B. Involves payments to foreigners

C. Increases the domestic money supply

D. Decreases the demand for foreign exchange

4 / 20

Q: If the U.S. faces a balance-of-payments deficit on the current account, it must run a surplus on:

A. The official settlements account

B. The capital account

C. Either the official settlements account or the capital account

D. Both the official settlements account and the capital account

5 / 20

Q: The U.S. balance of trade is determined by:

A. Exchange rates

B. Growth of economies overseas

C. Relative prices in world markets

D. All of the above

6 / 20

Q: What is the main reason behind the introduction of the euro?

A. It promotes economic sovereignty

B. It can protect business trading from currency fluctuations

C. To allow the free movement of people

D. It was a branding exercise

7 / 20

Q: The European Union is one powerful global economic bloc. ASEAN is best described as being:

A. A free trade zone

B. A confederation of states

C. A customs union

D. A monetary union

8 / 20

Q: International trade and domestic trade differ because of:

A. Trade restrictions

B. Immobility of factors

C. Different government policies

D. All of the above

9 / 20

Q: Which trade restriction stipulates the percentage of a product's total value that must be produced 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

10 / 20

Q: A production subsidy that is granted to a producer of an import-competing good

A. Does not require governmental taxes to finance it

B. Yields the same deadweight welfare loss as an import tariff or import quota

C. Has only a consumption effect deadweight loss

D. Has only a protective effect deadweight loss

11 / 20

Q: The home-country government can confiscate the revenue effect of an import quota if

A. Quota licenses are given to foreign exporting companies

B. Quota licenses are auctioned to the highest-bidding importing company

C. If quota licenses are given to domestic consumers of the good

D. Both (a) and (c)

12 / 20

Q: Gross domestic product measures

A. the gross weight of products that are imported into a domestic country.

B. the gross weight of products that are exported from a domestic country.

C. the gross profits from all final goods and services produced in an economy.

D. the total value of all final goods and services produced within an economy.

13 / 20

Q: International trade is based on the idea that:

A. Exports should exceed imports

B. Imports should exceed exports

C. Resources are more mobile internationally than are goods

D. Resources are less mobile internationally than are goods

14 / 20

Q: The Heckscher-Ohlin model assumes that___are identical in all trading countries

A. Gross domestic product

B. Technologies

C. Factor endowments

D. Both A. and B

15 / 20

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.

16 / 20

Q: What are most trade policies driven by?

A. Conflicts of interest between nations.

B. Conflicts of interest within nations.

C. Disagreements regarding who should produce certain products.

D. Disagreements on the prices of major commodities.

17 / 20

Q: When a commodity is produced with low K/L ratio that commodity is___intensive commodity

A. labour

B. capital

C. human capital

D. natural resources

18 / 20

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

19 / 20

Q: Trade in differentiated products are also called

A. intra industry trade

B. trade based on economies of scale

C. trade based on imitation gaps and product cycles

D. inter industry tarde

20 / 20

Q: Which among the following are the major assumptions of Absolute advantage theory?

A. there are two countries and two commodities and one country has absolute advantage in one commodity and the second country has advantage in another commodity.

B. labour is the only factor of production and labour is homogeneous, that means each unit of labour produces same level of output. value of a commodity is measured in terms of its labour content

C. labour is perfectly mobile within the country but perfectly immobile between the countries. it means that workers are free to move between industries within the nation but migration to other countries is impossible.

D. all the above.

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