Economics MCQs

Page No. 373

Free trade is based on the principle of ?


aComparative advantage

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b Comparative scale

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cEconomies of advantage

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d Production possibility advantage

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View Answer Comparative advantage

Which of the following is not an argument for protectionism ?


aTo protect infant industries

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bTo increase the level of imports

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cTo Protect strategic industries

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dTo improve the balance of payments

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


abalance of trade

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bcomparative advantage

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c balance of payments

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dterms of trade

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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

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b free trade area

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ccustoms union

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dfederation

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View Answer customs union

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


aComparative advantage is achieved

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bPrice elasticity of imports is unity and tariff revenue is maximized

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cimport prices are the same as export prices

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dmarginal social cost equals marginal social benefit

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


aSide payments

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bTariffs

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csubsidies

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dexport quotas

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View Answer subsidies

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


aThe price of goods when they leave the producing country

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

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ca tax on imports

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da government payment to encourage exports

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View Answer a tax on imports

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


aits opportunity costs; world opportunity costs

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bexport prices; import prices

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cValue of exports; value of imports

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d its currency; other currencies

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


a absolute advantage

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bmutual advantage

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cmultilateral advantage

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d comparative advantage

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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

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bHeckscher Ohlin theorem

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cLucas-Laffer theorem

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dFriedman Samuelson theorem

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