Question 1

The production possibility curve represents

Accepted Answer

A) The supply side 
B) The demand side 
C) Combination of four commodities 
D) None of the above 
A) The supply side 
B) The demand side 
C) Combination of four commodities 
D) None of the above A

Question 2

Which factor does not influence terms of trade?

Accepted Answer

A) Devaluation 
B) Overpopulation 
C) Trade policy 
D) Immigration 
A) Devaluation 
B) Overpopulation 
C) Trade policy 
D) Immigration D

Question 3

The income terms of trade is

Accepted Answer

A) The net barter terms of trade of a country multiplied by its export volume index 
B) The ratio between the quantities of a country's imports and exports 
C) The ratio between the price of a country's export goods and import goods 
D) None of the above 
A) The net barter terms of trade of a country multiplied by its export volume index 
B) The ratio between the quantities of a country's imports and exports 
C) The ratio between the price of a country's export goods and import goods 
D) None of the above A

Question 4

The opportunity cost theory considers

Accepted Answer

A) Labour as the only factor of production 
B) Capital as the only factor of production 
C) Both labour and capital 
D) Land, labour and capital 
A) Labour as the only factor of production 
B) Capital as the only factor of production 
C) Both labour and capital 
D) Land, labour and capital

Question 5

According to the absolute differences in cost theory of trade

Accepted Answer

A) No country should specialize in the production of any commodity 
B) Every country should specialize in the production of commodities which it can produce more cheaply than other countries and exchange it for commodities which are cheaper in other countries 
C) Every country should specialize in production of goods which it can produce at higher cost than other countries and exchange it for commodities which are costlier than other countries 
D) All of the above 
A) No country should specialize in the production of any commodity 
B) Every country should specialize in the production of commodities which it can produce more cheaply than other countries and exchange it for commodities which are cheaper in other countries 
C) Every country should specialize in production of goods which it can produce at higher cost than other countries and exchange it for commodities which are costlier than other countries 
D) All of the above

Question 6

The classical theory of international trade is based on

Accepted Answer

A) Labour theory of value 
B) Less than full employment 
C) Exchange rate differences 
D) None of the above 
A) Labour theory of value 
B) Less than full employment 
C) Exchange rate differences 
D) None of the above

Question 7

Community indifference curves have the same characteristics as

Accepted Answer

A) Transformation curve 
B) Offer curve 
C) Indifference curve 
D) Production possibility curve 
A) Transformation curve 
B) Offer curve 
C) Indifference curve 
D) Production possibility curve

Question 8

In case of Mill's theory, where country A produces good X and country B produces good Y, if country A's demand for product Y increases, then country A's offer curve will

Accepted Answer

A) Shift to the left 
B) Shift to the right 
C) Shift backwards 
D) Remain constant 
A) Shift to the left 
B) Shift to the right 
C) Shift backwards 
D) Remain constant

Question 9

The term 'factor intensity' refers to

Accepted Answer

A) The relative proportion of two commodities produced in a given period 
B) The relative amount of resources each country possesses 
C) The relative proportion of various factors of production used to produce a commodity 
D) None of the above 
A) The relative proportion of two commodities produced in a given period 
B) The relative amount of resources each country possesses 
C) The relative proportion of various factors of production used to produce a commodity 
D) None of the above

Question 10

Relative factor abundance in H-O theory of trade can be defined in terms of

Accepted Answer

A) The physical & price criterion of relative factor abundance(and the price criterion of relative factor abundance 
B) Perfect mobility of factors of production 
C) Production governed by increasing returns to scale 
D) Similar factor intensities 
A) The physical & price criterion of relative factor abundance(and the price criterion of relative factor abundance 
B) Perfect mobility of factors of production 
C) Production governed by increasing returns to scale 
D) Similar factor intensities

Question 11

The principle of reciprocal demand was introduced by

Accepted Answer

A) J.S.Mill 
B) Lionel Robbins 
C) Alfred Marshall 
D) Adam Smith 
A) J.S.Mill 
B) Lionel Robbins 
C) Alfred Marshall 
D) Adam Smith

Question 12

If a country has favourable terms of trade, it will claim

Accepted Answer

A) A larger share in the distribution of gains 
B) An equal share in the distribution of gains 
C) A smaller share in the distribution of gains 
D) None of the above 
A) A larger share in the distribution of gains 
B) An equal share in the distribution of gains 
C) A smaller share in the distribution of gains 
D) None of the above

Question 13

The Comparative theory of international trade is based on

Accepted Answer

A) Constant costs 
B) Variable costs 
C) Increasing costs 
D) Decreasing costs 
A) Constant costs 
B) Variable costs 
C) Increasing costs 
D) Decreasing costs

Question 14

Gains from trade depends on

Accepted Answer

A) Relative strength of elasticity of demand for export and import good 
B) Size of the country 
C) Change in technology 
D) All of the above 
A) Relative strength of elasticity of demand for export and import good 
B) Size of the country 
C) Change in technology 
D) All of the above

Question 15

The two types of gains from trade are

Accepted Answer

A) Internal and external gains 
B) Static and dynamic gains 
C) Relative and reactive gains 
D) All of the above 
A) Internal and external gains 
B) Static and dynamic gains 
C) Relative and reactive gains 
D) All of the above

Question 16

The main reason for different nations to enter into trade is that

Accepted Answer

A) Every nation can produce by itself all the commodities and services required by its citizens/people 
B) Some nations are capable to produce all the goods and services required by its people 
C) No country has the capacity to produce all the goods and services required by its citizens/people 
D) None of the above 
A) Every nation can produce by itself all the commodities and services required by its citizens/people 
B) Some nations are capable to produce all the goods and services required by its people 
C) No country has the capacity to produce all the goods and services required by its citizens/people 
D) None of the above

Question 17

The slope of the production possibility curve under Opportunity costs theory is also called

Accepted Answer

A) The average production curve 
B) Marginal rate of transformation 
C) Indifference curve 
D) Isoquant curve 
A) The average production curve 
B) Marginal rate of transformation 
C) Indifference curve 
D) Isoquant curve

Question 18

The difference in the domestic cost ratios of producing two commodities in two countries is known as

Accepted Answer

A) Actual gains 
B) Partial gains 
C) Potential gains 
D) Price gains 
A) Actual gains 
B) Partial gains 
C) Potential gains 
D) Price gains

Question 19

The H-O theory assumed the prevalence of

Accepted Answer

A) Monopolistic forms of market 
B) Perfect competition 
C) Oligopolistic forms of market 
D) Monopoly 
A) Monopolistic forms of market 
B) Perfect competition 
C) Oligopolistic forms of market 
D) Monopoly

Question 20

The fundamental reason why different countries involve in transactions with one another is the

Accepted Answer

A) Theory of absolute differences in costs 
B) Production of goods 
C) Gains from trade 
D) Supply of goods 
A) Theory of absolute differences in costs 
B) Production of goods 
C) Gains from trade 
D) Supply of goods

The production possibility curve represents

Which factor does not influence terms of trade?

The income terms of trade is

The opportunity cost theory considers

According to the absolute differences in cost theory of trade

The classical theory of international trade is based on

Community indifference curves have the same characteristics as

In case of Mill's theory, where country A produces good X and country B produces good Y, if country A's demand for product Y increases, then country A's offer curve will

The term 'factor intensity' refers to

Relative factor abundance in H-O theory of trade can be defined in terms of

The principle of reciprocal demand was introduced by

If a country has favourable terms of trade, it will claim

The Comparative theory of international trade is based on

Gains from trade depends on

The two types of gains from trade are

The main reason for different nations to enter into trade is that

The slope of the production possibility curve under Opportunity costs theory is also called

The difference in the domestic cost ratios of producing two commodities in two countries is known as

The H-O theory assumed the prevalence of

The fundamental reason why different countries involve in transactions with one another is the

Theories and Concepts in International Trade

Understanding Terms of Trade and Trade Gains Theory

Understanding Tariffs and Trade Policies

Understanding Tariffs and Quotas in International Trade

International Finance and Balance of Payments

Indias Balance of Payments and Foreign Trade: Part A

Indias Balance of Payments and Foreign Trade: Part B

Filters

Exam 2: Understanding International Trade Theories and Terms

The production possibility curve represents

Which factor does not influence terms of trade?

The income terms of trade is

The opportunity cost theory considers

According to the absolute differences in cost theory of trade

The classical theory of international trade is based on

Community indifference curves have the same characteristics as

In case of Mill's theory, where country A produces good X and country B produces good Y, if country A's demand for product Y increases, then country A's offer curve will

The term 'factor intensity' refers to

Relative factor abundance in H-O theory of trade can be defined in terms of

The principle of reciprocal demand was introduced by

If a country has favourable terms of trade, it will claim

The Comparative theory of international trade is based on

Gains from trade depends on

The two types of gains from trade are

The main reason for different nations to enter into trade is that

The slope of the production possibility curve under Opportunity costs theory is also called

The difference in the domestic cost ratios of producing two commodities in two countries is known as

The H-O theory assumed the prevalence of

The fundamental reason why different countries involve in transactions with one another is the

Theories and Concepts in International Trade

Understanding Terms of Trade and Trade Gains Theory

Understanding Tariffs and Trade Policies

Understanding Tariffs and Quotas in International Trade

International Finance and Balance of Payments

Indias Balance of Payments and Foreign Trade: Part A

Indias Balance of Payments and Foreign Trade: Part B

Filters