INTERNATIONAL TRADE (MCQS)

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SEMESTER - 5

INTERNATIONAL TRADE

MID SEMESTER EXAMINATION

MCQS - SEPTEMBER - 2015

(1) In the Heckscher - online model, international trade is based mostly on a difference in

(A) Technology

(B) Product differentiation

(C) Economies of scale

(D) Factor endowments

(2) In a two- good world, each country will have a comparative advantage in a different good, and this will ferm tha basis for

(A) Competition

(B) Specialization

(C) Proportionate gains

(D) Autarky of trade

(3) Ricardo explained the law of comparative advantage on the basis of

(A) Opportunity costs

(B)The law of diminishing returns

(C) Demand & supply theory

(D) The labor theory of value

(4) A country's net terms of trade is the ratio of

(A) The quantity of its exports to the quantity of its imports

(B) The value of its exports to the value of its imports

(C) The index of its export prices to the index of its import prices, multiplied by 100

(D) Domestic prices to international prices, multiplied by 100

(5) Autarky means

(A) Self sufficiency of nation

(B) Equilibrium with maximum gains from international trade

(C) Factors affecting ToT

(D) High standard living

(6) When ToT is set closer to the domestic exchange ration of opposite nation the gain will accrue to

(A) Home nation

(B) Foreign nation

(C) Both the nations

(D) None of the above

(7) Paul Krugman is credited with the

(A) Factor proportion theory

(B) New trade theory

(C) Law of factor price equalization

(D) Product life cycle theory

(8) Accounting to the factor proportions model, countries have comparative advantage in the good that

(A) Employs a relatively large amount their scarce factor.

(B) Employs a relatively large amount of the factor that they have relatively more of, than other countries.

(C) Uses intensively their scarce factor.

(D) Required proportionately more of every factor than the good they import.

(9) According to Hackscher - Ohlin model when a country opens up to international trade then the demand for the country's abundant Factor will

(A) Increase

(B) Decease

(C) Remain constant

(D) None of the above

(10) The terms of trade are

(A) Duration of time two countries have been trading.

(B) The Autarky of equilibrium

(C) The production possibilities curve of trading nations

(D) The exchange rate of two goods

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