Competitive Exams: Economics MCQs (Practice-Test 100 of 122)

  1. In which one of the following situations should a country pursue a cheap money policy?

    1. Balance of payments is unfavorable

    2. Price-are rising

    3. Gold is likely to flow out of the country

    4. Level of employment is low

  2. Normally, a country exports the commodity which is intensive in the use of its relatively abundant factor and imports the commodity which is intensive in the use of its relatively scarce factor. This has reference to:

    1. Harberler's theory of opportunity cost in international trade

    2. J S Mill's theory of reciprocal demand

    3. Heckscher-Ohlin's theorem

    4. None of the above

  3. Match List I with List 2 and select the correct answer using the codes given below the lists.

    List-I List-II
    1. Absolute advantage

    2. The doctrine of comparative cost

    3. Investment multiplier

    1. J S Mill

    2. JM Keynes

    3. David Ricardo

    4. Adam Smith

    • A
    • B
    • C
      • 4
      • 3
      • 2
      • 3
      • 1
      • 2
      • 4
      • 2
      • 3
      • 2
      • 3
      • 4
  4. Trade as an ‘engine of growth’ has in the past operated in the

    1. world as a whole

    2. nineteenth century

    3. developing countries

    4. twentieth century

  5. Trade in invisibles refers to

    1. unrecorded trade

    2. smuggling

    3. trade in military goods

    4. trade in services

  6. the following figures are based on the balance of payments accounts: Imports: Rs. 400 crores Exports: Rs. 340 crores Shipping: Rs. 3 crores Travel, tourism etc Rs. 5 crores Interest, dividends, profits Rs. 50 crores Migrants'funds: Rs. 1 crores Government: Rs. 40 crores The balance of trade is

    1. Rs. 740 crores

    2. Rs. 740 crores

    3. Rs. 60 crores

    4. Rs. 60 croes

  7. With perfectly elastic supply of exports and imports, an essential condition for an improvement in the balance of payments through devaluation is that the sum of price elasticity's of demand for export (nx) should be.

    1. greater than one

    2. equal to one

    3. less than one

    4. equal to zero

  8. Consider the following statements Given the domestic price level and exchange rate, an improvement in the balance of trade deficit can be effected through

    1. a contraction in domestic income

    2. an expansion in domestic income

    3. A contraction in income in foreign countries

    4. an expansion in income in foreign countries

    Of these statements

    1. 1 and 3 are correct

    2. 2 and 3 are correct

    3. 2 and 4 are correct

    4. 1 and 4 are correct

  9. match List I with List II and select the correct answer from the codes given below the Lists:

    List-I (Name of the author) List-II (Important concept in International Trade)
    1. F Y Edgeworth

    2. Prebisch-Singer

    3. Jacob Viner

    1. Box diagram

    2. Trade diversion and Trade creation effects of customs union

    3. Secular deterioration of terms of trade of developing countries

    • A
    • B
    • C
      • 1
      • 3
      • 2
      • 2
      • 3
      • 1
      • 3
      • 1
      • 2
      • 1
      • 2
      • 3
  10. Which one of the following institutions offers loans from a ‘Soft Loan Window’

    1. International Finance Corporation

    2. International Monetary Fund

    3. International Bank for Reconstruction and Development

    4. International Development Agency

  11. The scope for trade-creation effect is the largest if production structures in the countries forming the customs union are production structures in the countries forming the customs union are

    1. Primarily complementary

    2. Primarily competitive

    3. Both complementary and competitive

    4. Reffect each other

  12. In a two country model, factors of production viz, labour and capital, are more efficient in one country than the other, factor proportions are the same in both the countries. The production possibilities curves of the two countries will resemble those set in the following figure One can easily infer from the above figure that there is no possibility of trade between the two countries, because

    1. relative costs are identical

    2. relative costs are different

    3. real costs are different

    4. real costs are identical

  13. In the Above diagram country A's offer curve is a and the of B's is a β which is a straight line originating from O. Under free trade, equilibrium will be at P and a terms of trade are given by OP. A tariff imposed by A will change A's offer curve to a1 thereby reducing volume of trade without changing the terms of trade. In such a situation the optimum tariff for country A should be

    1. zero

    2. unity

    3. infinity

    4. 200%

  14. The mechanism of the gold standard implies within the framework of its rules

    1. symmetric adjustment of both surplus and deficit countries

    2. neutralization of gold flows

    3. the adjustment burden put wholly on the deficit country

    4. the adjustment burden put wholly on the surplus country

  15. Currently, the value of SDR is fixed in terms of

    1. gold

    2. dollar

    3. a basket of 16 currencies

    4. a basket of 5 currencies