the international economy and globalization MCQs – Page 3

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

the international economy and globalization Mcqs

41. The terms of trade measure ?
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A. Export prices compared to import prices

B. The GDP of one country compared to another

C. The quantity of exports of one country compared to another

D. The income of one country compared to another

42. Import substitution is the replacement of ____ by domestic production _____ protection of ________?
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A. exports, patents

B. exports, subsidies

C. imports, subsidies

D. imports, high tariffs or import quotas

43. International difference is opportunity costs lead to countries acquiring ?
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A. Comparative advantage

B. trade quotas

C. trade barriers

D. High exchange rates

44. A country has a comparative advantage in the production of a product if the goods _____ cost in different from the goods _____ cost in another country ?
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A. money; opportunity

B. foreign exchange money

C. opportunity; opportunity

D. resource; resource

45. International trade tends to cause welfare losses to at least some groups in a country ?
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A. The less mobile the countrys resources

B. higher the countrys initial living standard

C. The more mobile the countrys resources

D. The lower the countrys initial living standard

46. International specialization takes place because of______________?
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A. All of the above

B. differences in technology

C. differences in factor endowments

D. scale economies

47. Economists suggest that an optimum tariff would be one which reduce imports to a point where___________?
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A. import prices are the same as export prices

B. Price elasticity of imports is unity and tariff revenue is maximized

C. Comparative advantage is achieved

D. marginal social cost equals marginal social benefit

48. Increased foreign competition tend to ?
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A. Intensify inflationary pressure at home

B. Place constraints on the wages of domestic workers

C. Increase profits of domestic import competing industries

D. Induce falling output per worker-hour for domestic workers

49. 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 ?
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A. trade creation and trade diversion

B. trade creation

C. trade diversion

D. trade channeling

50. If a country can produce 10 of product A or 4 of product B the opportunity cost of 1B is ?
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A. 1B

B. 0.4A

C. 2.5A

D. 10A

51. International trade in goods and services tends to ?
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A. Keep all domestic costs and prices at the same level

B. Increase all domestic costs and prices

C. Lessen the amount of competition facing home manufacturers

D. Increase the amount of competition facing home manufacturers

52. Output fell sharply in the transition economies because ?
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A. banks were unable to function

B. All of the above

C. there was little corporate control

D. vital infrastructure was missing

53. In a floating exchange rate system ?
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A. The Balance of payments will always equal the government budget

B. The exchange rate should adjust to equate the supply and demand of the currency

C. The government intervenes to influence the exchange rate

D. The Balance of payments should always be in surplus

54. Tariffs ?
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A. Increase the quantity of imports

B. Increase government earnings from tax

C. Decrease domestic production

D. Decrease the domestic price of a product

55. The level of the equilibrium exchange rate offsets international differences in ?
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A. relative costs

B. absolute advantage

C. opportunity cost

D. comparative advantage

56. If goods are exported for less than societys marginal production cost and the marginal benefit to domestic consumers, it is likely that they benefit from?
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A. a quota

B. an import subsidy

C. an export subsidy

D. comparative advantage

57. International trade forces domestic firms to become more competitive in terms of ?
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A. Product price

B. The introduction of new products

C. Product design and quality

D. All of the above

58. An optimal tariff is one which reduces imports to the level at which ____ equals ____?
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A. imports, exports

B. The demand for currency the supply of currency

C. social marginal cost, social marginal benefit

D. the balance of trade, zero

59. A primary reason why nations conduct international trade is because ?
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A. interest rates are not identical in all trading nations

B. Trade enhances opportunities to accumulate profits

C. Some nations prefer to produce one thing while others produce another

D. Resources are not equally distributed to all trading nations

60. Which American industry has least been affected by import competition in recent years ?
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A. Radios and TVs

B. Steel

C. Computer software

D. Automobiles

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