International trade Mcqs with solutions

T.Y B.COM

SEMESTER - 5

MID SEMESTER EXAMINATION

INTERNATIONAL TRADE

(IT)

MCQs = 2010 - 2011

1. The gross barter and commodity terms of trade are equal when ________

a. There is surplus in balance of trade

b. There is deficit in balance of trade

c. There is equilibrium in balance of trade

d. None of the above

2. The offer curve of a nation bulges towards the axis that measures its ______

a. Export commodity

b. Import commodity

c. Export-Import commodity

d. Non-Traded commodity

3. The slope of community indifference curve expresses _______

a. Exchange ratio between two commodities

b. Marginal rate of substitution in consumption

c. Marginal rate of transformation in production

d. None of the above

4. Nations through trade _____

a. May consume at levels beyond their production possibilities frontiers.

b. Will be limited in their consumption to points on the production possibilities frontiers.

c. Will not alter their previous production patterns.

d. Are more likely to be confined to choices inside their production-possibilities frontiers.

5. The achievement of gains from trade requires _____

a. Comparative advantage

b. Absolute advantage

c. Net Advantage

d. Both comparative and absolute advantage

6. Which of following statements is incorrect?

a. Countries normally specialize in production because they differ in resources, skills & other endowments

b. A country may in fact export a commodity in which it does not have a absolute advantage

c. If one country is extremely efficient in the production of all goods, it will normally export all of its goods rather than import.

d. If the relative price ratio of two goods is the same for a country whether or not it engages in international trade, that country will not gain from trade.

7. According to theory of comparative costs there are types of cost differences.

b. Two

a. One

c. No Specified

d. Three

8. When a country reduces its tariff barriers so that it import more

a. All trading countries probably will benefit

b. All people in both the importing and exporting countries probably will benefit

c. All people in the importing country probably will benefit

d. Nobody in the exporting country will benefit because they will end up with fewer goods

9. The terms of trade _____

a. Measures relative prices in the importing country

b. Measure relative prices in the exporting country

c. Measure how many units of goods must be given up for each unit received in trade by a trading country

d. Measures the volume of exports

10. Tariff barrier tend to _____

a. Reduce the Volume of world production

b. Reduce the efficiency of world production

c. Raise prices in tariff imposing countries

d. All of the above

11. When tariff is imposed the offer curve of a nation will _______

a. Shift towards the axis measuring its export good

b. Remain at the original position

c. Shift towards the axis measuring is import goods

d. Become a linear function.

12. According to Heckscher- Ohlin theory, trade results mainly form the fact that different countries have _______

a. Differences in tastes and preferences

b. Difference in factor endowments

c. Differences in technology

d. Differences in demand conditions

13. International and inter-regional trade differ primarily because ______

a. Comparative advantage is relevant to the former but not to the latter

b. Comparative advantage is relevant to the latter but not to the former

c. Commodities flow across national boundaries

d. Resources supplies vary as between different nations of the world

14. Foreign trade helps each country to make _____ use of its natural resources.

a. Better

b. Less

c. Optimal

d. None of these

15. Purchase of goods from one country with the object of selling than to another country is called _____ trade.

a. Indian

b. Enter port

c. Export

d. Import

16. USA should import according to H-O theory _______

a. Labor intensive goods

b. Capital intensive goods

c. Both (a) &(b)

d. None of the above

17. The imposition of custom duty improves nations welfare,

a. Always

b. Sometimes

c. Never

d. None of the above

18. Imposition of tariff will lead to ____

a. Deterioration in terms of trade

b. Improvement in terms of trade

c. Both (a) & (b)

d. No effect on terms of trade

19. Shape of the offer curve is determined by ______

a. Supply conditions

b. Demand conditions

c. Both (a) & (b)

d. None of the above

20. Offer curve was developed by _____

a. A.Pigou

b. J.M.Keynes

c. David Ricardo

d. None of the above

21. Vertical straight line portion of the offer curve depicts elasticity equal to _____

a. Infinity

b. Less than Unity

c. Greater than unity

d. Unity

22. According to Leontief, USA Exports _____

a. Capital intensive goods

b. Labor intensive goods

c. Both (a) & (b)

d. None of the above

23. According to Heckscher-Ohlin theory, production function of different countries for same product is _____

a. Different

b. Same

c. Either (a) or (b)

d. None of the above

24. Imposition of tariff leads to _____

a. Decrease in prices of imports

b. Decrease in prices of exports

c. Increase in prices of imports

d. Increase in prices of exports

25. The concept of income terms of trade was first formulated by ____

a. Taussing

b. J.S.Mill

c. Jacobviner

d. G.S. Dorrance

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