Economics MCQs

Page No. 369

The level of the equilibrium exchange rate offsets international differences in ?


acomparative advantage

✖


babsolute advantage

✓


copportunity cost

✖


drelative costs

✖


View Answer absolute advantage

International difference is opportunity costs lead to countries acquiring ?


aComparative advantage

✓


bHigh exchange rates

✖


ctrade barriers

✖


dtrade quotas

✖


View Answer Comparative advantage

To prevent the external value of the currency from falling the government might ?


aReduce interest rates

✖


bSell its own currency

✖


cBuy its own currency with foreign reserves

✓


dIncrease its own spending

✖



The marginal propensity of consume is equal to ?


aTotal spending / total consumption

✖


bTotal consumption / total income

✖


cChange in consumption / change in income

✓


d Change in consumption / change in savings

✖



The terms of trade measure ?


aThe income of one country compared to another

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bThe GDP of one country compared to another

✖


cThe quantity of exports of one country compared to another

✖


dExport prices compared to import prices

✓



If a country can produce 10 of product A or 4 of product B the opportunity cost of 1B is ?


a0.4A

✖


b2.5A

✓


c10A

✖


d1B

✖


View Answer 2.5A

A demand switching policy could be ?


aHigher interest rates

✖


bHigher income tax

✖


cTariffs

✓


dReduced government spending

✖


View Answer Tariffs

What is not a feature of the EU as a single market ?


aElimination of border controls

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bNo import taxes on goods bought in another members country

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cEach country can retain its own technical standards

✓


dCommon security arrangements

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When free trade areas are set up the member countries trade with each other grows faster than their trade with other countries This is due to what economist call ?


atrade diversion

✖


btrade channeling

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ctrade creation and trade diversion

✓


d trade creation

✖



Economic integration ?


a occurs when countries are granted most favored nation status

✖


boccurs when one country voluntarily agrees to reduce its exports to another country

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coccurs when two or more nations join to form a free-trade zone

✓


dOccurs when countries develop an acquired comparative advantage that makes their industries more competitive in international markets

✖



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