International Economics Quiz 18 (20 MCQs)

Quiz Instructions

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1. If a firm increases its output in the ..... and unit costs ....., then the firm is experiencing ..... of scale.

Correct Answer: A) Long run; decrease; economies.

2. What is meant by profits from international trade according to the law of comparative advantage?

Correct Answer: E) Increasing the wealth of a country.

3. Which institution is called an 'accessible credit window'?

Correct Answer: D) International Development Authority (IDA) International Development Bank.

4. The earliest statement of the principle comparative advantage is associated with

Correct Answer: B) David Ricardo.

5. Foreign trade deficit

Correct Answer: B) Increase in the country's import of goods and services over export of goods and services.

6. Overtime, economic interdependence of nations has:

Correct Answer: A) Grown.

7. One possible opportunity for a business as a consequence of globalisation is:

Correct Answer: D) Able to buy a wider range of imported materials and products.

8. Tariff is a specification of a maximum amount of commodities which maybe imported into a country in any period of time.

Correct Answer: A) TRUE.

9. Import and Export of service are known as .....

Correct Answer: B) Invisible trade.

10. Which of the following is NOT the advantages of international trade?

Correct Answer: B) Depletion of country's reserves.

11. Which of the following protectionist measures will not raise the price for consumers?

Correct Answer: B) Subsidies.

12. The Federal Reserve keeps a measure of the international value of the dollar

Correct Answer: A) Trade Weighted Value of a Dollar.

13. During the Cold War, developing countries could:

Correct Answer: B) Benefit by playing the USSR against the U.S.

14. If two nations specialize according to the law of comparative advantage and then trade with each other, which of the following would be true?

Correct Answer: D) Each nation would increase its consumption possibilities.

15. International trade has promoted interdependence of nations

Correct Answer: A) True.

16. What is hyperinflation?

Correct Answer: C) A situation in which prices rise very fast.

17. Which result would you expect from a U.S. import quota on automobiles?

Correct Answer: B) Higher automobile prices for US consumers.

18. The redistribution effect of an import tariff is the transfer of income from the domestic:

Correct Answer: B) Buyers to domestic producers of the good.

19. An economic or military measure put in place to punish another country

Correct Answer: A) Sanction.

20. ..... is the ability of a nation or region to produce more of a certain product.

Correct Answer: A) Comparative Advantage.