This quiz works best with JavaScript enabled. Home > Finance > Economics > International Economics > International Economics – Quiz 21 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Economics Quiz 21 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. China has a pegged exchange rate which means A) It always keeps below US $ and maintains its advantage in trade. B) It is part fixed and part floating depending on world events. C) It is pegged to currency in Asia so that CVhina maintains its dominance. D) All of these options. Show Answer Correct Answer: A) It always keeps below US $ and maintains its advantage in trade. 2. If the U.S. government uses an expansionary monetary policy to reduce interest rates, then it will: A) Lead to higher imports and lower exports. B) Cause the exchange rate for U.S. currency to depreciate. C) Lower levels of consumption and investment. D) Cause the exchange rate for U.S. currency to appreciate. Show Answer Correct Answer: B) Cause the exchange rate for U.S. currency to depreciate. 3. Someone who strongly opposes a trade barrier like quotas or tariffs would MOST LIKELY argue that the barrier A) Might cause more unemployment in domestic industries. B) Will lead to higher prices and fewer imported goods. C) Would lead to lower government involvement in the economy. D) Would completely eliminate imported goods. Show Answer Correct Answer: B) Will lead to higher prices and fewer imported goods. 4. Two or more people depending on each other for goods and services is called ..... A) Economic specialization. B) Economic interdependence. C) Economic choices. D) Scarcity. Show Answer Correct Answer: B) Economic interdependence. 5. The classical trade theories of Smith and Ricardo predict that A) Countries will completely specialize in the production of export goods. B) Considerable trade will occur between countries with different levels of technology. C) Small countries could obtain all of the gains from trade when trading with large countries. D) All of the above. Show Answer Correct Answer: D) All of the above. 6. 'Transactional activities involving export and import of goods and services between one country with another'. This statement describes about ..... A) International trade. B) Macroeconomic problem. C) Public finance. D) None of above. Show Answer Correct Answer: A) International trade. 7. The IMF was established in the year A) 1945. B) 1946. C) 1947. D) 1944. Show Answer Correct Answer: B) 1946. 8. In comparing a tariff and quota, we find that ..... A) Both will generate revenue for government. B) The tariff generates revenue for the government but the quota does not. C) Neither the tariff nor the quota generates revenue for the government. D) The tariff generates revenue for the government but the quota does not. Show Answer Correct Answer: B) The tariff generates revenue for the government but the quota does not. 9. The UNCTAD was born in 1964 at ..... A) Geneva. B) Tokyo. C) London. D) Washington. Show Answer Correct Answer: A) Geneva. 10. A corporation is considered a multinational ..... if ..... A) Parent; more than 10% of its stock is held by a foreign company. B) Parent; it owns more than 10% of a foreign firm. C) Child; more than 50% of its stock is held by a foreign company. D) Child; more than 10% of its stock is held by a foreign company. Show Answer Correct Answer: B) Parent; it owns more than 10% of a foreign firm. 11. What kind of economic integration arrangement has common policies on product regulation, and free movement of goods, services, capital and labour? A) Preferential trading area. B) Free trade areas. C) Custom unions. D) Common markets. Show Answer Correct Answer: D) Common markets. 12. If the tariff on computers is not changed, but domestic computer producers shift from domestically produced semiconductors to imported components, then the effective rate of protection in the A) Remain the same. B) Increase. C) Decrease. D) No longer apply. Show Answer Correct Answer: B) Increase. 13. A useful material found in the environment A) Renewable Resource. B) Natural Resource. C) Economics. D) Scarcity. Show Answer Correct Answer: B) Natural Resource. 14. "A country should produce and export that good which is produced by the country's most abundant factor of production" ..... Which of the following theory postulate this statement? A) Absolute cost advantage theory. B) Ricard's theory of international trade. C) Heckscher-Ohlin model of international trade. D) None of these. Show Answer Correct Answer: C) Heckscher-Ohlin model of international trade. 15. When a currency experience falling value, it refer to the terms ..... in variable exchange rate system. A) Depreciation. B) Appreciation. Show Answer Correct Answer: A) Depreciation. 16. If a nation has an open economy, it means the nation: A) Allows private ownership of capital. B) Has flexible exchange rates. C) Has fixed exchange rates. D) Conducts trade with other countries. Show Answer Correct Answer: D) Conducts trade with other countries. 17. Foreign outsourcing is ..... A) The transfer of operations to foreign contractors. B) An example of internalization. C) Currently illegal in the U.S. D) An example of foreign direct investment. Show Answer Correct Answer: A) The transfer of operations to foreign contractors. 18. Importing more than exporting is A) Balance of trade. B) Balance of payment. C) Trade surplus. D) Trade deficit. Show Answer Correct Answer: D) Trade deficit. 19. ..... and quotas are the main ways the United States government controls trade. A) International. B) Tariffs. C) Products. D) Foreign. Show Answer Correct Answer: B) Tariffs. 20. The WTO has ..... members A) 139. B) 164. C) 151. D) 104. Show Answer Correct Answer: D) 104. 21. The amount by which the cost of a country's imports exceeds the value of its exports. A) Trade deficit. B) Balance of trade. C) Trade account. D) Trade surplus. Show Answer Correct Answer: A) Trade deficit. 22. One of the PRIMARY reasons that trade between nations takes place is because A) No nation can be economically self-sufficient. B) Resources are evenly distributed around the world. C) Nations use their absolute advantage in production to monopolize international markets. D) Nations produce a surplus at a lower cost and export it for goods that are too costly to produce. Show Answer Correct Answer: D) Nations produce a surplus at a lower cost and export it for goods that are too costly to produce. 23. The factor endowment model of international trade was developed by A) Adam Smith. B) David Ricardo. C) John Stuart Mill. D) Eli Heckscher and Bertil Ohlin. Show Answer Correct Answer: D) Eli Heckscher and Bertil Ohlin. 24. Which of the following would decrease the demand for A$ by the British A) More UK students go on gap year in australia. B) UK buy more australian exports. C) Uk invest in australian mining projects. D) UK tourists decide to stay in Majorca rather than go all tge way to australia. Show Answer Correct Answer: D) UK tourists decide to stay in Majorca rather than go all tge way to australia. 25. All of the following are examples of trade barriers, except? A) Income Tax. B) Quota. Show Answer Correct Answer: A) Income Tax. 26. "Nation could become rich and powerful only by exporting more than importing." is the view on trade of: A) Adam Smith. B) David Ricardo. C) Mercantilists. D) None of above. Show Answer Correct Answer: C) Mercantilists. 27. An agreement that will eliminate trade barriers as well as the barriers for the flow of FOP is an example of a A) Customs union. B) Free Trade area. C) Common market. D) Preferential trade area. Show Answer Correct Answer: C) Common market. 28. Those in favor of protectionist trade policies would most likely A) Believe that restrictions harm consumers. B) Argue in support of free trade. C) Support a massive reduction in tariffs. D) Cite the need to preserve domestic industries and jobs. Show Answer Correct Answer: D) Cite the need to preserve domestic industries and jobs. 29. WTO was formed to overcome in ineffectiveness of ..... to promote A) IBRS. B) IMF. C) NAFTA. D) GATT. Show Answer Correct Answer: D) GATT. 30. Which of the following is most likely to cause an increase in the international value of the dollar? A) Higher real interest rates abroad. B) Higher U.S. interest rates. C) Expansionary monetary policy in the U.S. D) Lower U.S. government spending. Show Answer Correct Answer: B) Higher U.S. interest rates. ← PreviousNext →Related QuizzesEconomics QuizzesFinance QuizzesInternational Economics Quiz 1International Economics Quiz 2International Economics Quiz 3International Economics Quiz 4International Economics Quiz 5International Economics Quiz 6International Economics Quiz 7International Economics Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books