Economics MCQs

Page No. 372

LDCs are reluctant to pursue development through the export of primary products because of ____ and _____ ?


a The upward trend in commodity prices the stability of primary products real prices

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bThe upward trend in commodity prices, the volatility of primary products real prices

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cThe downward trend in commodity prices the stability of primary products real prices

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dThe downward trend in commodity prices the volatility of primary products real prices

✓



All of the following represent obstacles to LDC development except ?


aresource scarcity

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b low levels of investment

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clow population

✓


d poor infrastructure

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View Answer low population

Economic transition involves high inflation because _____ and ______?


ahigh monetary growth high wages

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b high budget deficits devaluation

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chigh monetary growth devaluation

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d. Prices surge from an artificially low level to their equilibrium level the inflation tax is required a source of government revenue

✓



An optimal tariff is one which reduces imports to the level at which ____ equals ____?


aimports, exports

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bthe balance of trade, zero

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cThe demand for currency the supply of currency

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d social marginal cost, social marginal benefit

✓



The imposition of a tariff causes consumption to _____ and imports to _________?


arise, rise

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b fall, rise

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c fall, fall

✓


drise, fall

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View Answer fall, fall

The main cause of different relative costs between countries are ?


a relative factor competition

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b relative factor mobility

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crelative factor substitution

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drelative factor endowments

✓



International specialization takes place because of______________?


adifferences in technology

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bdifferences in factor endowments

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cscale economies

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dAll of the above

✓


View Answer All of the above

If there is a balance of payments deficit then in a floating exchange rate system ?


aThe external value of the currency would tend to fall

✓


b The external value of the currency would tend to rise

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cThe injections from trade are greater then the withdrawals

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dAggregate demand is increasing

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In a floating exchange rate system ?


aThe government intervenes to influence the exchange rate

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bThe exchange rate should adjust to equate the supply and demand of the currency

✓


cThe Balance of payments should always be in surplus

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dThe Balance of payments will always equal the government budget

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Tariffs ?


aDecrease the domestic price of a product

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b Increase government earnings from tax

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c Increase the quantity of imports

✓


dDecrease domestic production

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