T.Y B.COM
SEMESTER - 5
INTERNATIONAL TRADE
(IT)
MID SEM EXAMINATION PAPER
MCQs: 22nd September, 2016
1.
The table below shows consumption shares of the two countries A and B for commodities X and after international trade. Country A completely specializes in the
production of X and country B in Y. What international terms of trade has been applied this hypothetical table?
|
Country |
Commodity |
Total
Consumption |
|
|
X |
Y |
||
|
A |
60 |
40 |
100 |
|
B |
40 |
60 |
100 |
|
World Output |
100 |
100 |
200 |
(A) 1:2
(B) 2:1
(C) 1:1
(D) 3:2
2.
Which of the following is not a tool used in the H-O theorem?
(A) demand curve
(B) PPC
(C) iso-quants
(D) iso-costs
3.
Match the following:
|
i. Absolute cost advantage |
A. David Ricardo |
|
ii. Comparative cost advantage |
B. J.S.Mill |
|
iii. Principle of reciprocal demand |
C. Adam Smith |
|
iv. Offer curves |
D. Edgeworth Marshall |
(A) i-A, ii-B, iii-C, iv-D
(B) i-C, ii-A, iii-B, iv-D
(C) i-C, ii-A, iii-D, iv-B
(D) i-A, ii-C, iii-B, iv-D
4.
Given the Table below answer which country specializes in the production of goods Output per day of work
|
Countries |
Food (units) |
Cloth (units) |
|
India |
6 |
3 |
|
China |
1 |
2 |
(A) India has absolute advantage in food and china specialize in cloth
(B) China has absolute advantage in the production of cloth
(C) Both India and China has absolute advantage in cloth
(D) None of the above
5.
The index of import prices stands at 102, the index of export prices stands at 106, the Terms of Trade is
(A) 2.08
(B) 5.4
(C) 1.03
(D) 4
6.
Smith‘s theory of absolute advantage is based on
(A) capital theory of value
(B) opportunity costs
(C) absolute theory of value
(D) non of the above
7.
An economy without international trade is an economy in a state of
(A) disequilibrium
(B) economic depression
(C) autarky
(D) economic expansion
8.
The concept of reciprocal demand suggests that
(A) the country with the greater demand for the other country‘s product will gain more from trade.
(B) the country with the greater demand for the other country‟s product will gain less from trade.
(C) that demand for another country‘s product does not influence the terms of trade.
(D) that the terms of trade will dictate the amount of debt the country will acquire to purchase the product.
9.
When a production possibilities curve is a straight line, production occurs under conditions of
(A) constant costs
(B) Increasing costs
(C) decreasing costs
(D) none of the above
10. If a Country‘s Production bias and Consumption bias are in opposite directions, the Heckscher Ohlin‘s prediction would be
(A) valid
(B) distorted
(C) invalid
(D) applicable
11. Which of the statements is correct?
(A) Country A gains if the international terms of trade is equal to its domestic terms of trade
(B) Country A gains if the international terms of trade is closer to its domestic terms of trade
(C) Country A gains the most if the international terms of trade is equal to the domestic terms trade of its trading partner country B
(D) Country A gains the most if the international terms of trade is half way between the domestic terms of trade of country A and B
12. Identical demand conditions in home and foreign country but inelastic supply home country and elastic supply in foreign country, will result into the following
(A) lower price in foreign country
(B) higher price in foreign country
(C) lower price in home country
(D) equal price in both the countries
13. The Commodity in which the nation has the smaller absolute disadvantage is the commodity of
(A) absolute disadvantage
(B) absolute advantage
(C) comparative disadvantage
(D) comparative advantage
14. According to H.O. theory India should export
(A) labour intensive goods
(B) Capital intensive goods
(C) intermediate goods
(D) none of the above
15. The offer curve of a nation bends towards the axis that measures its — commodity.
(A) export
(B) import
(C) non-traded
(D) export or import
16. Theory that suggests that a country‘s wealth is based on amount of gold it holds is
(A) absolute Advantage
(B) Mercantilism
(C) comparative advantage
(D) factor- proportion
17. Krugman‘s theory emphasizes on
(A) economies of scale
(B) imperfect competition
(C) differential product
(D) all of the above
18. Modern Theory of International Trade is based on the views of
(A) Robbins and Ricardo
(B) Heckscher and Ohlin
(C) Adam Smith and Marshall
(D) Keynes
19. According to HO theory, production function of different countries for same product is
(A) same
(B) different
(C) depends of technology in the country
(D) none of the Above
20. Under H-O theorem, if the capital labor ratio of country A is greater than that of country B, it implies that
(A) A is a capital abundant country
(B) B is a capital abundant country
(C) A is a labour abundant country
(D) B is a labor scarce country
21. The economic welfare of a country will be maximized not when the commodity terms
of trade are maximized but when they are optimized. This argument was put forth by
(A) Heckscher and Ohlin
(B) Edgeworth and Marshall
(C) Haberler
(D) W.T.O.
22. At equilibrium, Heckscher-Ohlin model hypothesizes ________.
(A) equal advantages to trading nations
(B) factors price equalization
(C) equality of factors in use
(D) none of the above
23. According to new trade theory trade is mutually beneficial in case of
(A) two identical countries
(B) two dissimilar countries
(C) two factor countries
(D) none of the above
24. The models of Smith & Ricardo together constitute what is sometimes referred to as
(A) demand Version of the classical Theory of Trade
(B) supply version of the classical theory of trade
(C) specialization Version of the classical theory of Trade
(D) labour Version of the classical Theory of Trade
25. Free Trade tends to bring about
(A) complementarily of goods
(B) equalization of factor prices
(C) equalization of factors
(D) substitution of services
26. Which factor does not influence the terms trade?
(A) devaluation
(B) immigration
(C) overpopulation
(D) trade policy
27. International trade is possible primarily through
(A) generalization in production of all goods
(B) specialization in production of one good
(C) specialization in production of few goods
(D) all of the above
28. Terms of trade are
(A) length of time two industries or countries have been trading
(B) countries‘ production possibility curves
(C) autarky equilibrium
(D) exchange rate of two goods
29. Which of the following theories holds that different countries produce some goods
more efficiently than others thus global efficiency can increase through free trade?
(A) absolute advantage
(B) mercantilism
(C) comparative advantage
(D) country size
30. The difference between single and double factorial terms of trade is explained by
productivity change in _________ productivity.
(A) export
(B) comparative
(C) absolute
(D) import
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