Economics MCQs

Page No. 373

Free trade is based on the principle of ?


aComparative advantage


b Comparative scale


cEconomies of advantage


d Production possibility advantage


View Answer Comparative advantage

Which of the following is not an argument for protectionism ?


aTo protect infant industries


bTo increase the level of imports


cTo Protect strategic industries


dTo improve the balance of payments



When countries from large trading blocs like the EU, the size of the bloc has the effect of improving them ?


abalance of trade


bcomparative advantage


c balance of payments


dterms of trade


View Answer terms of trade

If a group of countries abolish trade barriers between them and set same tariffs on goods coming in from other countries they are a ?


acommon market


b free trade area


ccustoms union


dfederation


View Answer customs union

Economists suggest that an optimum tariff would be one which reduce imports to a point where___________?


aComparative advantage is achieved


bPrice elasticity of imports is unity and tariff revenue is maximized


cimport prices are the same as export prices


dmarginal social cost equals marginal social benefit



Government payments made to domestic firms in order to encourage exports are called ?


aSide payments


bTariffs


csubsidies


dexport quotas


View Answer subsidies

The term tariff, as used in international trade refers to ?


aThe price of goods when they leave the producing country


ba limit on the quantity of a good that can be imported into a country


ca tax on imports


da government payment to encourage exports


View Answer a tax on imports

Term of trade for a country are the ratio of _______________ to _____________?


aits opportunity costs; world opportunity costs


bexport prices; import prices


cValue of exports; value of imports


d its currency; other currencies



David Ricardo’s theory in favor of free trade uses the ideal of ?


a absolute advantage


bmutual advantage


cmultilateral advantage


d comparative advantage



The theory that states that a country has a comparative advantage in the production of a product if that country is relatively well endowed with inputs used intensively in the production of that product is the?


a Ricardo Malthus theorem


bHeckscher Ohlin theorem


cLucas-Laffer theorem


dFriedman Samuelson theorem



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