Competitive Exams: Economics MCQs (Practice-Test 53 of 122)

  1. The term of trade refers to

    1. the excess of import expenditure over export earnings

    2. Trade agreements

    3. the ratio between export prices and import prices

    4. the terms and conditions on which a country is offered loaned in the event of balance of payments difficulties

  2. The government of India announced a new NRI (non-resident Indian) deposit scheme. This offers a very high interest rate, compared to the interest rates abroad, on foreign currency deposits by NRIs in Indian Commercial banks. Many NRIs in the US do invest under this scheme. Under a flexible exchange rate system, this would tend to

    1. depreciate the value of Indian rupee against US dollar

    2. appreciate the value of Indian rupee against US dollar

    3. deplete the foreign exchange reserve of India.

    4. leave the value of rupees against US dollar unchanged

  3. India is a net exporter of hand-made carpets and an importer of high-tech products like computer memory chips and printers. This pattern of Indian trade is explained by the

    1. Ricardian theory

    2. Heckscher-Ohlin theory

    3. labour theory of value

    4. purchasing power parity theory

  4. Presently, India's exchange rate policy towards current account and capital account transactions is that the rupee is

    1. fully convertible for current account transactions, but not for capital account transactions

    2. fully convertible for capital account transactions, but not for current account transactions.

    3. fully convertible for both capital and current account transactions

    4. not convertible for either type of transactions

  5. Mr. Ramprakash travelled to England for medical operation. He had to bear the cost of his air travel by air India as well as the cost of hospitalization. In this context, which one of the following is true in terms of entry in India's balance of payments transactions?

    1. The cost of hospitalization is included in-service imports but the cost of air travel is not

    2. The cost of air travel is included in service imports but the cost of hospitalization is not

    3. Both expenditures are included in the category of service imports

    4. Both expenditures are included in service exports

  6. Suppose that the world economy consists of two countries. ‘Home’ and' Foreign shifts.

    1. Home's offer curve to the right

    2. Foreign's offer curve to the right

    3. Home's offer curve to the left

    4. Foreign's offer curve to the left

  7. In the context of a small, completive currency, an increase in import tariff causes.

    1. a consumption deadweight loss in terms of welfare since consumers now pay a higher price for the product

    2. a production deadweight gain in terms of welfare since Homestic producers gain from tariff protection

    3. an overall welfare gain

    4. a trade gain since the amount import decreases

  8. In the tow-good Ricardian trade model, complete specialization in production occurs in free trade equilibrium because

    1. the production possibility frontier satisfies increasing opportunity cost

    2. Thee are diminishing returns to the factor of production

    3. there are increasing returns to the factor of production

    4. the production possibility frontier satisfies constant opportunity cost

  9. Special Drawing Rights (SDRs) is the currency of IME this is in the form of

    1. paper currency

    2. gold

    3. silver and gold both

    4. book-keeping entry only

  10. Consider the following statements: The Brettonwoods Conference led to the establishment of

    1. IMF

    2. IBRD

    3. United Nations

    Which of the above statements are correct?

    1. 1 and 2

    2. 2 and 3

    3. 1 and 3

    4. 1, 2 and 3

  11. A deficit in a country's balance of payment refers to the difference between

    1. autonomous receipts and autonomous payments

    2. accommodating receipts and autonomous payments

    3. accommodating receipts and accommodating payments

    4. autonomous receipts and accommodating payments

  12. What is the correct sequence of the following?

    1. Uruguay Round Talks

    2. WT's Seattle Meet

    3. Establishment of GATT

    Select the correct answer using the codes given below:

    1. 1, 2, 3

    2. 3, 1, 2

    3. 3, 2, 1

    4. 2, 3, 1

  13. Which one of the following treaties was covered by this Uruguay Round Negotiations?

    1. General agreement on trace in services

    2. Trade-related intellectual property rights

    3. Trade-related investment measures

    4. All of the above

  14. The Heckscher-Ohlin theory of trace pattern assumes.

    1. perfect competition in the product markets but not in the factor markets.

    2. perfect competition in the factor markets but not in the product markets

    3. perfect competition in both product and factor markets

    4. unemployment in the labour market

  15. Which one of the following statements is NOT correct? Fisher's index

    1. lies between Laspeyres'index (L) and Paasche's index (P)

    2. is the arithmetic mean of L and P

    3. is the geometric mean of L and P

    4. is equal to L or P if L = P