the international economy and globalization MCQs – Page 2

Practise focused the international economy and globalization questions with marked answers for exam preparation and subject revision.

the international economy and globalization Mcqs
21. Free trade is based on the principle of ?
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A. Comparative scale

B. Production possibility advantage

C. Economies of advantage

D. Comparative advantage
22. LDCs often have a comparative advantage in the production of ?
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A. financial services

B. primary products

C. intermediate products

D. manufactured products

23. If the Uk placed a limit on the amount of steel that could be imported into the UK in a particular period this would be an example of ?
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A. a quota

B. a tariff

C. an export subsidy

D. dumping

24. The main cause of different relative costs between countries are ?
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A. relative factor competition

B. relative factor mobility

C. relative factor substitution

D. relative factor endowments
25. The real income of domestic producers and consumers can be increased by ?
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A. Technological progress, but not international trade

B. Neither technological progress nor international trade

C. Technological Progress and international trade

D. International trade but not technological progress

26. Which of the following is not an argument for protectionism ?
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A. To improve the balance of payments

B. To protect infant industries

C. To Protect strategic industries

D. To increase the level of imports
27. A main advantage of specialization results from ?
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A. Economies of large-scale production

B. The specializing country behaving as a monopoly

C. High wages paid to foreign workers

D. Smaller production runs resulting in lower unit costs

28. Term of trade for a country are the ratio of _______________ to _____________?
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A. export prices; import prices

B. its currency; other currencies

C. its opportunity costs; world opportunity costs

D. Value of exports; value of imports

29. For the United States, commercial jetliners are ?
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A. Exported, but not imported

B. Imported, but not exported

C. Imported and exported

D. Neither exported nor imported

30. One of the main advantages of trade economists suggest is ?
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A. lower tariffs

B. development of tourism

C. technological change

D. competitions with foreign suppliers
31. To prevent the external value of the currency from falling the government might ?
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A. Sell its own currency

B. Reduce interest rates

C. Buy its own currency with foreign reserves

D. Increase its own spending

32. A feasible effect of international trade is that a (an) ?
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A. Monopoly in the home market becomes an oligopoly in the world market

B. Purely competitive firm in the home market becomes an oligopolist

C. Oligopoly in the home market becomes a monopoly in the world market

D. purely competitive firm in the home market becomes a monopolist

33. Tariffs are used to protect infant industries these industries are those which ?
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A. use a new technology

B. are not yet large enough to achieve economies of scale

C. are competing with well-established overseas firms

D. employ many young or untrained workers

34. LDCs are reluctant to pursue development through the export of primary products because of ____ and _____ ?
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A. The upward trend in commodity prices, the volatility of primary products real prices

B. The downward trend in commodity prices the stability of primary products real prices

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

D. The downward trend in commodity prices the volatility of primary products real prices
35. If a country has a burden of debt it cannot sustain it can ?
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A. any of the above

B. default on the loan

C. reschedule debt

D. get a loan from an international organization

36. What is not a feature of the EU as a single market ?
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A. Common security arrangements

B. Elimination of border controls

C. Each country can retain its own technical standards

D. No import taxes on goods bought in another members country

37. All of the following represent obstacles to LDC development except ?
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A. low levels of investment

B. poor infrastructure

C. poor human capital

D. resource scarcity

E. low population
38. The imposition of a tariff causes consumption to _____ and imports to _________?
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A. rise, rise

B. fall, fall

C. rise, fall

D. fall, rise

39. The marginal propensity of consume is equal to ?
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A. Change in consumption / change in income

B. Total spending / total consumption

C. Change in consumption / change in savings

D. Total consumption / total income

40. A reduced share of the world export market for the United States would be attributed to?
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A. High levels of investment by American corporations

B. High incomes of American households

C. Decreased productivity in U.S manufacturing

D. Relatively low interest rates in the United States