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1 | |
International specialization takes place because of __________ |
| | A) | differences in technology |
| | B) | differences in factor endowments |
| | C) | scale economies |
| | D) | all of the above |
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2 | |
International differences in opportunity costs lead to countries acquiring __________ |
| | A) | comparative advantage |
| | B) | high exchange rates |
| | C) | trade barriers |
| | D) | trade quotas |
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3 | |
If a country does not have an absolute cost advantage in the production of a any good, there is no incentive to trade |
| | A) | TRUE |
| | B) | FALSE |
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4 | |
The main cause of different relative costs between countries are ___________ |
| | A) | relative factor competition |
| | B) | relative factor mobility |
| | C) | relative factor substitution |
| | D) | relative factor endowments |
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5 | |
The level of the equilibrium exchange rate offsets international differences in ____________ |
| | A) | comparative advantage |
| | B) | absolute advantage |
| | C) | opportunity cost |
| | D) | relative costs |
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6 | |
International trade can never hurt any people |
| | A) | TRUE |
| | B) | FALSE |
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7 | |
The imposition of a tariff causes consumption to _________ and imports to ________ |
| | A) | rise, rise |
| | B) | fall, rise |
| | C) | fall, fall |
| | D) | rise, fall |
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8 | |
A tariff causes domestic firms to __________ and consumers to __________ |
| | A) | overproduce, underconsume |
| | B) | overproduce, overconsume |
| | C) | underproduce, underconsume |
| | D) | underproduce, overconsume |
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9 | |
Tariffs always distort trade and are never justified. |
| | A) | TRUE |
| | B) | FALSE |
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10 | |
An optimal tariff is one which reduces imports to the level at which _________ equals _______ |
| | A) | imports, exports |
| | B) | the balance of trade, zero |
| | C) | the demand for currency, the supply of currency |
| | D) | social marginal cost, social marginal benefit |
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11 | |
If goods are exported for less than society's marginal production cost and the marginal benefit to domestic consumers, it is likely that they benefit from ___________ |
| | A) | an import subsidy |
| | B) | a quota |
| | C) | comparative advantage |
| | D) | an export subsidy |
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12 | |
Export subsidies do not involve waste |
| | A) | TRUE |
| | B) | FALSE |
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13 | |
Economic transition involves high inflation because ____________ and ___________ |
| | A) | high monetary growth, high wages |
| | B) | high budget deficits, devaluation |
| | C) | high monetary growth, devaluation |
| | D) | prices surge from an artificially low level to their equilibrium level, the inflation tax is required as source of government revenue |
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14 | |
Output fell sharply in the transition economies because |
| | A) | banks were unable to function |
| | B) | there was little corporate control |
| | C) | vital infrastructure was missing |
| | D) | all of the above |
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15 | |
Most transition economies are seeking membership of the EU |
| | A) | TRUE |
| | B) | FALSE |
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16 | |
All of the following represent obstacles to LDC development except |
| | A) | resource scarcity |
| | B) | low levels of investment |
| | C) | low population |
| | D) | poor infrastructure |
| | E) | poor human capital |
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17 | |
LDCs often have a comparative advantage in the production of ___________ |
| | A) | primary products |
| | B) | intermediate products |
| | C) | manufactured products |
| | D) | financial services |
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18 | |
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 |
| | B) | the upward trend in commodity prices, the volatility of primary products real prices |
| | C) | the downward 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 |
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19 | |
Buffer stocks increase price volatility in an unstable market |
| | A) | TRUE |
| | B) | FALSE |
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20 | |
Import substitution is the replacement of _____________ by domestic production under the protection of ____________________ |
| | A) | exports, subsidies |
| | B) | exports, patents |
| | C) | imports, high tariffs or import quotas |
| | D) | imports, subsidies |
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21 | |
If a country has a burden of debt it cannot sustain it can _______________ |
| | A) | reschedule debt |
| | B) | get a loan from an international organization |
| | C) | default on the loan |
| | D) | any of the above |
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22 | |
If an LDC chooses structural adjustment as a strategy for development, it will nationalize its principle industries |
| | A) | TRUE |
| | B) | FALSE |
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2003 A McGraw-Hill Online Learning Centre