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


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


bNo import taxes on goods bought in another members country


cEach country can retain its own technical standards


dCommon security arrangements



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


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


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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