Competitive Exams: Economics MCQs (Practice_Test 118 of 122)

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  1. an optimum tariff
    1. improves the terms of trade
    2. keeps the terms of trade constant
    3. lowers the terms of trade
    4. reduces the country՚s welfare level
  2. For the Heckscher-Ohlin theory of trace to be valid, the relative factor endowments of two countries should be
    1. close to each other
    2. as divergent as possible
    3. identical
    4. of no concern
  3. Which one of the following statements is NOT correct?
    1. Trade between two countries can take place when their supply and demand conditions are identical
    2. trade between two countries can take place with different supply conditions and similar demand conditions
    3. Trade between two countries an take place will identical supply conditions and dissimilar demand conditions
    4. Trade between two countries can take place with difference supply and demand conditions.
  4. If the price elasticity of demand for exports is zero, then exports in local currency will
    1. be the same after devaluation
    2. fall after devaluation
    3. substantially increase after devaluation
    4. partially increase after devaluation
  5. Customs union always leads to
    1. trade diversion alone
    2. trade creation alone
    3. neither trade diversion nor trade creation
  6. An import tariff in a labour surplus economy distributes income in favour of
    1. landlords
    2. wage eamers
    3. owners of capital and skills
    4. Government
  7. Consider the following assumptions:
    1. Perfect competition
    2. Perfect mobility of factors between countries
    3. Constant returns to scale

    Which of the above assumptions are associated with Ricardo՚s Theory of

    Comparative Costs?

    1. 1,2 and 3
    2. 1 and 2
    3. 1 and 3
    4. 2 and 3
  8. Which of the above assumptions are associated with Recardo՚s offer curves of two countries, H and F: The diagram indicates that
    1. H is a large country
    2. F is a large country
    3. both H and F are large countries
    4. Both H and F are small countries
  9. Which one of the following pairs is NOT correctly matched?
      • WTO
      • Generally forbids the use of quantitative restrictions in trade
      • IMF
      • Provides finance to correct disequilibrium in balance of payments.
      • SAARC
      • Promotes trade among south Asian countries
      • ASEAN
      • Economic organization of all

    Asian countries

  10. The assumption of non-factor intensity reversal used in proving the Heckscher-Ohlin theorem is
    1. necessary
    2. sufficient
    3. necessary and sufficient
    4. neither necessary nor sufficient
  11. Consider the following statements: Foreign Portfolio Investment in India means
    1. investment by a foreign firm to start a subsidiary
    2. investment by a foreign firm to take over an existing firm
    3. foreign investment in shares
    4. foreign investment in bonds
  12. the automatic borrowing rights of a member f IMF are determined by
    1. the seriousness of its balance of payments disequlibrium
    2. its subscribed quota in the fund
    3. the size of its holdings of reserve currencies
    4. the value of its currency in terms of gold
  13. Consider the following statements: As per the Trade Related Investment Measures (TRIMs)
    1. all restrictions on foreign capital companies are to be scrapped
    2. no restrictions will be imposed on any area of investment
    3. imports of raw materials are to be allowed freely
    4. export of part of the output will be mandatory

    Which of the above statements are correct?

  14. The utilisation of disguised unemployment as a source of savings potential in underdeveloped countries was suggested by
    1. R Nurkse
    2. P Baran
    3. R Harrod
    4. W W Rostow
  15. Which one of the following pairs is NOT correctly matched
      • Rolling plan for developing countries
      • Kaldor
      • Economic determinism
      • Marx
      • Balanced growth theory
      • Nurkse
      • Development with unlimited surplus of labour
      • Lewis