Econ
- 1.
Globalization:
- A.
Increases efficiency in production
- B.
May lead to job losses
- C.
Is inevitable
- D.
All of the above
Correct Answer
D. All of the above -
- 2.
The anti-globalization movement blames globalization for
- A.
Increasing poverty and world income inequalities
- B.
Child labor
- C.
Environmental pollution
- D.
All of the above d. all of the above all of the above
Correct Answer
D. All of the above d. all of the above all of the above -
- 3.
Which of the following products are not produced at all in the United States?
- A.
Coffee, tea, cocoa
- B.
Steel, copper, aluminum
- C.
Petroleum, coal, natural gas
- D.
Typewriters, computers, airplanes
Correct Answer
A. Coffee, tea, cocoa -
- 4.
International trade is most important to the standard of living of:
- A.
The United States
- B.
Switzerland
- C.
Germany
- D.
England
Correct Answer
B. Switzerland -
- 5.
Over time, the economic interdependence of nations has:
- A.
Grown
- B.
Diminished
- C.
Remained unchanged
- D.
Cannot say
Correct Answer
A. Grown -
- 6.
A rough measure of the degree of economic interdependence of a nation is given by:
- A.
The size of the nations' population
- B.
The ratio of its population to its GDP
- C.
The ratio of a nation's imports and exports to its GDP
- D.
All of the above
Correct Answer
C. The ratio of a nation's imports and exports to its GDP -
- 7.
Economic interdependence is greater for:
- A.
Small nations
- B.
Large nations
- C.
Developed nations
- D.
Developing nations
Correct Answer
A. Small nations -
- 8.
Immigration benefits the United States by:
- A.
Increasing the availability of skilled and technical people
- B.
Increasing the availability of all kinds of labor
- C.
Increasing the supply of capital
- D.
All of the above
Correct Answer
A. Increasing the availability of skilled and technical people -
- 9.
Capital move across national boundaries to:
- A.
Earn higher interest
- B.
Earn higher profit
- C.
Diversify risk
- D.
All of the above
Correct Answer
D. All of the above -
- 10.
International economics deals with:
- A.
The flow of goods, services and payments among nations
- B.
Policies directed at regulating the flow of goods, services and payments
- C.
The effects of policies affecting international trade and finance on the welfare of the nation
- D.
All of the above
Correct Answer
D. All of the above -
- 11.
International trade theory refers to:
- A.
The microeconomic aspects of international trade
- B.
The macroeconomic aspects of international trade
- C.
Open-economy macroeconomics or international finance
- D.
All of the above
Correct Answer
A. The microeconomic aspects of international trade -
- 12.
Which of the following is not the subject matter of international finance?
- A.
Foreign exchange markets
- B.
The balance of payments
- C.
The basis and the gains from trade
- D.
Policies to adjust balance of payments disequilibria
Correct Answer
C. The basis and the gains from trade -
- 13.
International trade is similar to interregional trade in that both must overcome:
- A.
Distance and space
- B.
Trade restrictions
- C.
Differences in currencies
- D.
Differences in monetary systems
Correct Answer
A. Distance and space -
- 14.
The opening or expansion of international trade usually affects all members of society:
- A.
Positively
- B.
Negatively
- C.
Most positively but some negatively
- D.
Most negatively but some positively
Correct Answer
C. Most positively but some negatively -
- 15.
The most serious international economic problem is:
- A.
The rise of trade protectionism in advanced countries
- B.
Job losses arising from globalization in advanced countries
- C.
Deep poverty in some developing countries.
- D.
It benefits all people
Correct Answer
D. It benefits all people -
- 16.
The Mercantilists did not advocate:
- A.
Free trade
- B.
Stimulating the nation's exports
- C.
Restricting the nations' imports
- D.
The accumulation of gold by the nation
Correct Answer
A. Free trade -
- 17.
According to Adam Smith, international trade was based on:
- A.
Absolute advantage
- B.
Comparative advantage
- C.
Both absolute and comparative advantage
- D.
Neither absolute nor comparative advantage
Correct Answer
A. Absolute advantage -
- 18.
What proportion of international trade is based on absolute advantage?
- A.
All
- B.
Most
- C.
Some
- D.
None
Correct Answer
C. Some -
- 19.
The commodity in which the nation has the smallest absolute disadvantage is the commodity of it’s:
- A.
Absolute disadvantage
- B.
Absolute advantage
- C.
Comparative disadvantage
- D.
Comparative advantage
Correct Answer
D. Comparative advantage -
- 20.
If in a two-nation (A and B), two-commodity (X and Y) world, it is established that nation A has a comparative advantage in commodity X, then nation B must have:
- A.
An absolute advantage in commodity Y
- B.
An absolute disadvantage in commodity Y
- C.
A comparative disadvantage in commodity Y
- D.
A comparative advantage in commodity Y
Correct Answer
D. A comparative advantage in commodity Y -
- 21.
If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):
- A.
Nation A has a comparative disadvantage in commodity X
- B.
Nation B has a comparative disadvantage in commodity Y
- C.
Nation A has a comparative advantage in commodity X
- D.
Nation A has a comparative advantage in neither commodity
Correct Answer
C. Nation A has a comparative advantage in commodity X -
- 22.
With reference to the statement in Question 21:
- A.
Px/Py=1 in nation A
- B.
Px/Py=3 in nation B
- C.
Py/Px=1/3 in nation B
- D.
All of the above
Correct Answer
D. All of the above -
- 23.
With reference to the statement in Question 21, if 3X is exchanged for 3Y:
- A.
Nation A gains 2X
- B.
Nation B gains 6Y
- C.
Nation A gains 3Y
- D.
Nation B gains 3Y
Correct Answer
B. Nation B gains 6Y -
- 24.
With reference to the statement of Question 21, the range of mutually beneficial trade between nation A and B is:
- A.
3Y < 3X < 5Y
- B.
5Y < 3X < 9Y
- C.
3Y < 3X < 9Y
- D.
1Y < 3X < 3Y
Correct Answer
C. 3Y < 3X < 9Y -
- 25.
If domestically 3X=3Y in nation A, while 1X=1Y domestically in nation B:
- A.
There will be no trade between the two nations
- B.
The relative price of X is the same in both nations
- C.
The relative price of Y is the same in both nations
- D.
All of the above
Correct Answer
D. All of the above -
- 26.
Ricardo explained the law of comparative advantage on the basis of:
- A.
The labor theory of value
- B.
The opportunity cost theory
- C.
The law of diminishing returns
- D.
All of the above
Correct Answer
A. The labor theory of value -
- 27.
The Ricardian trade model has been empirically
- A.
Verified
- B.
Rejected
- C.
Not tested
- D.
Tested but the results were inconclusive
Correct Answer
A. Verified -
- 28.
The Ricardian model was tested empirically in terms of differences in
- A.
Relative labor productivities costs in various industries among nations
- B.
Relative labor costs in various industries among nations
- C.
Relative labor productivities and costs in various industries among nations
- D.
None of the above
Correct Answer
C. Relative labor productivities and costs in various industries among nations -
- 29.
A difference in relative commodity prices between two nations can be based upon a difference in:
- A.
Factor endowments
- B.
Technology
- C.
Tastes
- D.
All of the above
Correct Answer
D. All of the above -
- 30.
In the trade between a small and a large nation:
- A.
The large nation is likely to receive all of the gains from trade
- B.
The small nation is likely to receive all of the gains from trade
- C.
The gains from trade are likely to be equally shared
- D.
We cannot say
Correct Answer
B. The small nation is likely to receive all of the gains from trade -
- 31.
A production frontier that is concave indicates that the nation incurs increasing opportunity costs in the production of:
- A.
Commodity X only
- B.
Commodity Y only
- C.
Both commodities
- D.
Neither commodity
Correct Answer
C. Both commodities -
- 32.
The marginal rate of transformation (MRT) of X for Y refers to:
- A.
The amount of Y that a nation must give up to produce each additional unit of X
- B.
The opportunity cost of X
- C.
The absolute slope of the production frontier at the point of production
- D.
All of the above
Correct Answer
D. All of the above -
- 33.
Which of the following is not a reason for increasing opportunity costs?
- A.
Technology differs among nations
- B.
Factors of production are not homogeneous
- C.
Factors of production are not used in the same fixed proportion in the production of all commodities
- D.
For the nation to produce more of a commodity, it must use resources that are less and less suited in the production of the commodity
Correct Answer
A. Technology differs among nations -
- 34.
Community indifference curves:
- A.
Are negatively sloped
- B.
Are convex to the origin
- C.
Should not cross
- D.
All of the above
Correct Answer
D. All of the above -
- 35.
The marginal rate of substitution (MRS) of X for Y in consumption refers to the:
- A.
Amount of X that a nation must give up for one extra unit of Y and still remain on the same indifference curve
- B.
Amount of Y that a nation must give up for one extra unit of X and still remain on the same indifference curve
- C.
Amount of X that a nation must give up for one extra unit of Y to reach a higher indifference curve
- D.
Amount of Y that a nation must give up for one extra unit of X to reach a higher indifference curve
Correct Answer
B. Amount of Y that a nation must give up for one extra unit of X and still remain on the same indifference curve -
- 36.
Which of the following statements is true with respect to the MRS of X for Y?
- A.
It is given by the absolute slope of the indifference curve
- B.
Declines as the nation moves down an indifference curve
- C.
Rises as the nation moves up an indifference curve
- D.
All of the above
Correct Answer
D. All of the above -
- 37.
Which of the following is not true for a nation that is in equilibrium in isolation?
- A.
It consumes inside its production frontier
- B.
It reaches the highest indifference curve possible with its production frontier
- C.
The indifference curve is tangent to the nation's production frontier
- D.
MRT of X for Y equals MRS of X for Y, and they are equal to Px/Py
Correct Answer
A. It consumes inside its production frontier -
- 38.
If the internal Px/Py is lower in nation 1 than in nation 2 without trade:
- A.
Nation 1 has a comparative advantage in commodity Y
- B.
Nation 2 has a comparative advantage in commodity X
- C.
Nation 2 has a comparative advantage in commodity Y
- D.
None of the above
Correct Answer
C. Nation 2 has a comparative advantage in commodity Y -
- 39.
If actual Px/Py exceeds the equilibrium relative Px/Py with trade
- A.
The nation exporting commodity X will want to export more of X than at equilibrium
- B.
The nation importing commodity X will want to import less of X than at equilibrium
- C.
Px/Py will fall toward the equilibrium Px/Py
- D.
All of the above
Correct Answer
D. All of the above -
- 40.
With free trade under increasing costs:
- A.
Neither nation will specialize completely in production if both nations are large
- B.
At least one nation will consume above its production frontier
- C.
A small nation will always gain from trade
- D.
All of the above
Correct Answer
D. All of the above -
- 41.
At a relative commodity price below equilibrium
- A.
The quantity demand of imports is smaller than the quantity supplied of exports
- B.
The relative price of the commodity will fall
- C.
The commodity price will rise
- D.
None of the above
Correct Answer
C. The commodity price will rise -
- 42.
At a relative commodity price above equilibrium
- A.
The quantity demand of imports exceeds the quantity supplied of exports
- B.
The relative price of the commodity will rise
- C.
The commodity price will fall
- D.
None of the above
Correct Answer
C. The commodity price will fall -
- 43.
If the terms of trade increase in a two-nation world, those of the trade partner:
- A.
Deteriorate
- B.
Improve
- C.
Remain unchanged
- D.
Any of the above
Correct Answer
A. Deteriorate -
- 44.
A deterioration of a nation's terms of trade causes the nation's welfare to:
- A.
Deteriorate
- B.
Improve
- C.
Remain unchanged
- D.
Any of the above
Correct Answer
D. Any of the above -
- 45.
Mutually beneficial trade cannot occur if production frontiers are:
- A.
Equal but tastes are not
- B.
Different but tastes are the same
- C.
Different and tastes are also different
- D.
The same and tastes are also the same.
Correct Answer
D. The same and tastes are also the same. -
- 46.
The H-O model extends the classical trade model by:
- A.
Explaining the basis for comparative advantage
- B.
Examining the effect of trade on factor prices
- C.
Both a and b
- D.
Neither a nor b
Correct Answer
C. Both a and b -
- 47.
A nation is said to have a relative abundance of K if it has a:
- A.
Greater absolute amount of K
- B.
Smaller absolute amount of L
- C.
Higher L/K ratio
- D.
Lower price of K in relation to the price of L
Correct Answer
D. Lower price of K in relation to the price of L -
- 48.
A difference in relative commodity prices between nations can be based on a difference in:
- A.
Technology
- B.
Factor endowments
- C.
Tastes
- D.
All of the above
Correct Answer
D. All of the above -
- 49.
In the H-O model, international trade is based mostly on a difference in:
- A.
Technology
- B.
Factor endowments
- C.
Economies of scale
- D.
Tastes
Correct Answer
B. Factor endowments -
- 50.
According to the H-O theory, trade reduces international differences in:
- A.
Commodity prices
- B.
In factor prices
- C.
Both commodity and factor prices
- D.
Neither relative nor absolute factor prices
Correct Answer
C. Both commodity and factor prices -
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Feb 05, 2013Quiz Edited by
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Dec 01, 2011Quiz Created by
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