Competitive Exams: Economics MCQs (Practice-Test 3 of 122)

  1. In the given diagram, curves aa and bb represent the isoquants for good A and good B, P0P0 represent relative factor prices in country. P1P1 and P2P2 represents relative factor price in country. Which of the following in references can be drawn from the date presented in the diagram?

    1. Good A is the capital intensive goods.

    2. Good B is a labour intensive good.

    3. Capital is cheap in country I.

    Select the correct answer from the codes given below:

    1. 1, 2 and 3

    2. 1 and 2

    3. 2 and 3

    4. 1 and 3

  2. match List I with List II and select the correct answer:

    List-I List-II
    1. supply side of International Trade

    2. Demand side of International Trade

    3. Opportunity cost of International Trade

    4. Real cost theory of International Trade

    1. David Recardo

    2. Bastable and Alfred Marshall

    3. G. Haberler

    4. Alfred Marshall and Edgeworth

    • A
    • B
    • C
    • D
      • 1
      • 4
      • 2
      • 3
      • 1
      • 4
      • 3
      • 2
      • 4
      • 1
      • 2
      • 3
      • 4
      • 1
      • 3
      • 2
  3. The main objective of the World Trade Organization is to secure among others

    1. a general agreement among common market countries on technical training and mutual prices of traded goods

    2. the maintenance of intellectual property rights and patent rights of member countries

    3. an improvement in the USA's terms of trade in the next decade

    4. a reduction in tariffs through negotiation, elimination of import quotas and globalization of international trade.

  4. One of the advantages of free trade in improvement in the distribution of income. Free trade thus results in some income redistribution by

    1. raising the income of the poor

    2. lowering the income of the rich

    3. raising the income of the poor and lowering the income of the rich

    4. lowering the price of the scarce factor and raising the price of the abundant factor

  5. if the demand of the domestic consumers is infinitely elastic and the supply of the foreign producer is perfectly in elastic, then the whole of the tariff will.

    1. be paid by the domestic consumers

    2. be paid by the foreign producer

    3. be equally shared by the domestic consumers and the foreign producer.

    4. yield neither revenue nor protection to either of them

  6. the optimum tariff is at a point where the elasticity of the offer curve is

    1. infinity

    2. unity

    3. greater than unity but less than infinity

    4. less than unity

  7. Which of the following pairs of GATT rounds and the associated years are correctly matched?

      • First round
      • 1948.
      • Kennedy round
      • 1964 − 67
      • Tokyo round
      • 1973 − 79.

    Select the correct answer from the codes given below:

    1. 1, 2 and 3

    2. 1 and 2

    3. 2 and 3

    4. 1 and 3

  8. Assume that the government decides to protect the washing machine industry by imposing a nominal 10% (advalorem) tariff on the price of washing machine. Total cost of washing machine is Rs. 10, 000. The contribution of domestic primary factor is 40% and of imported inputs is 60%. After nominal tariff, the unit price of the washing machine will be Rs. 11, 000, = Rs. 10, 000 + 1, 000. The effective rate of tariff in this case is

    1. 5%

    2. 10%

    3. 25%

    4. 40%

  9. The given diagram represents a country producing only tow goods ‘A’ and ‘B’ PP represents the production-possibility curve. Consider the following statement in this regard. An outward shift of the production possibility curve (to P ‘P’ P ‘P’ ) will take place due to

    1. technological process

    2. increase in available resources

    3. increase in consumption.

    Of these statements

    1. 1, 2 and 3 are correct

    2. 1 and 2 are correct

    3. 2 and 3 are correct

    4. 1 and 3 are correct

  10. Match List I with List II and select the correct answer:

    List-I List-II
    1. Free trade area

    2. customs union

    3. common a market

    4. economic union

    1. No restrictions on trade and factor movement

    2. Trade is free and no custom duties

    3. No customs duties; duties on non members

    4. Advanced stage of integration

    • A
    • B
    • C
    • D
      • 2
      • 1
      • 3
      • 4
      • 3
      • 2
      • 4
      • 1
      • 2
      • 3
      • 1
      • 4
      • 1
      • 3
      • 4
      • 2
  11. In the given diagram, curves I and II present respectively production-possibility curves of countries A and B. The diagram refers to a two-country, two-commodity model. When free trade opens up, each country specializes on the lines of ricardian model of trade. At some point of time, the terms Given that Trade are settled at domestic exchange ratio of country ‘A’ In this case, gain from international trade will accrue

    1. wholly to country ‘A’

    2. wholly to country ‘B’

    3. to both the countries in equal proportions

    4. to both countries but ‘B’ will gain more than ‘A’

  12. Match List I with List Ii and select the correct answer:

    List-I List-II
    1. unrequited receipts

    2. Accommodating Finance

    3. Transfer items

    4. Autonomous items

    1. Gifts, reparations received from foreigners

    2. Lending, borrowing, and gold transfer

    3. Commercial imports and exports

    4. currency transfer by monetary authority

    • A
    • B
    • C
    • D
      • 1
      • 4
      • 2
      • 3
      • 4
      • 1
      • 2
      • 3
      • 1
      • 4
      • 3
      • 2
      • 4
      • 1
      • 3
      • 2
  13. The Currency and finance Report of the Reserve Bank of India, gives the following information for a particulars financial year: (Figures in Rs. Crores)

    1. Currency and coins with the public: 21, 178

    2. Demand deposits with the Commercial banks: 13, 720.

    3. Other deposits with the Reserve Bank of India: 413

    4. Saving deposits with Post offices: 2, 548

    5. Time deposits with commercial banks: 55, 273

    6. Total deposits with Post

    Offices: 9, 010

    Based on this data, the Money Supply (M2) would be equal to (amount in Rs. Crores).

    1. 90, 584

    2. 35, 311

    3. 99, 594

    4. 37, 859

  14. Match List I with List II and select the correct answer:

    List-I (Definitions of money) List-II (Economists)
    1. Money is what money does

    2. Anything which is widely accepted in payment for goods or in discharge of other kinds of business obligations.

    3. The essence of money is that it can be passed from hand to hand in one act of circulation after another

    4. One thing that possesses general acceptability

    1. Walker

    2. G D H code

    3. D. H. Robertson

    4. Seligman

    • A
    • B
    • C
    • D
      • 1
      • 3
      • 4
      • 2
      • 1
      • 3
      • 2
      • 4
      • 3
      • 1
      • 2
      • 4
      • 3
      • 1
      • 4
      • 2
  15. Consider the following:

    1. Money supply M2.

    2. Saving deposits with Post Office saving banks.

    3. net time deposits of banks.

    4. Total deposits of the post Office saving banks excluding NSC.

    The measure of Money Supply M3 would include

    1. 1, 2 and 3

    2. 1 and 3

    3. 1 and 4

    4. 3 and 4