Practice Test

Q1) Unilateral transfers include _________ Show Answer

Q2) The full form of TRIMs is _________ Show Answer

Q3) WTO was set up on _________ Show Answer

Q4) Autonomous capital inflows ________ other items in the balance of payments. Show Answer

Q5) The current account in the balance of payments ________ Show Answer

Q6) A deficit in India's balance of payments in recent times is due to _____________. Show Answer

Q7) Good performance on ________ has helped India to improve its current account balance in recent times. Show Answer

Q8) There has been impressive increase in _______ on India's capital account in the recent times. Show Answer

Q9) After covering deficits on current account, excess capital account receipts are added to _______. Show Answer

Q10) Bank capital on India's capital account includes _______. Show Answer

Q11) Private transfers on India's current account includes _______ Show Answer

Q12) Gains from trade are possible when cost ratio of the trading countries are different Show Answer

Q13) International trade brings in many dynamic gains. Show Answer

Q14) Balance of trade always balances. Show Answer

Q15) Short term lending is listed on the debit side of the balance of payments. Show Answer

Q16) Items that give rise to receipts of foreign currency are listed on the debit side of the balance of payments. Show Answer

Q17) The purpose of WTO is to remove restrictions in international trade Show Answer

Q18) India’s receipts on invisible accounts have played an important role on balance of payments front in the recent times Show Answer

Q19) Cyclical transmission causes disequilibrium in balance of payments. Show Answer

Q20) Depreciation of a currency makes the imports cheaper Show Answer

Q21) Depreciation of a currency makes the exports cheaper. Show Answer

Q22) Devaluation means official reduction in the value of the Indian currency. Show Answer

Q23) Economies today are Autocratic Show Answer

Q24) Payment made to other countries is debit Show Answer

Q25) Capital account has two types of flow Show Answer

Q26) A plus sign indicates rise in foreign exchange Show Answer

Q27) Most Favoured Nations (MFN) rule under WTO implies that some countries have more advantage in trade. Show Answer

Q28) The Agreements of WTO are related to only non-agricultural goods. Show Answer

Q29) Cost differences are due to difference in factor prices Show Answer

Q30) Ordinary demand curves slopes upwards from left to right Show Answer

Q31) A shift in the offer curve changes the extent of gains from trade Show Answer

Q32) Domestic trade leads to higher level of consumption Show Answer

Q33) International organisations are classified as foreign residents Show Answer

Q34) Industrial products includes consumer and capital goods Show Answer

Q35) A surplus on current Account is always a matter of worry Show Answer

Q36) It may be a rare incident if a item by itself achives a balance Show Answer

Q37) Low Demand for import causes deficits in exporting countires Show Answer

Q38) Imports have kept rising since 1991 in India Show Answer

Q39) Recently China has become a major competitor of India Show Answer

Q40) WTO deals only with all small aspects of international trade Show Answer

Q41) The WTO agreement is lengthy and complex Show Answer

Q42) GATTs VIII round of Meeting lasted for 8 yrs Show Answer

Q43) International trade increases the welfare of ------------. Show Answer

Q44) International trade increase the -------- of participating countries. Show Answer

Q45) According to David Ricardo, international trade is beneficial under ----------- cost. Show Answer

Q46) David Ricardo's Theory assumes perfect mobility of labour ---------. Show Answer

Q47) Comparative cost theory is static theory because it assumes -----------. Show Answer

Q48) Ricardian theory measures comparative cost in terms of -------. Show Answer

Q49) Ricardian theory assumes that labour is ------ within the country. Show Answer

Q50) Ricardian theory can be extended to ----------. Show Answer

Q51) Hecksher Ohlin theory on international trade can explain ------ trade. Show Answer

Q52) Commodity X is capital intensive, when in its production capital / labour ratio is--------- than Commodity Y. Show Answer

Q53) Hecksher Ohlin theory cannot be applied to more than ----------. Show Answer

Q54) According to Hecksher Ohlin theory, product price depends on ----------. Show Answer

Q55) According to Hecksher Ohlin theory, the international trade takes place due to difference in ------------. Show Answer

Q56) In International trade, --------- move between nations. Show Answer

Q57) Terms of trade are expressed as a ratio of ---------. Show Answer

Q58) Terms of trade are favourable if the current index in comparison to the base year index is ---------. Show Answer

Q59) Gross barter terms of trade takes into account -------. Show Answer

Q60) Income terms of trade indicate increased capacity to ----------. Show Answer

Q61) Single factoral terms of trade takes into account changes in ---------. Show Answer

Q62) Generally, the developing countries ---------- terms of trade. Show Answer

Q63) The gain from trade is maximum if the international terms of trade are -----------. Show Answer

Q64) An offer curve differs from ---------. Show Answer

Q65) International trade results in ---------. Show Answer

Q66) Cultural changes due to international trade are --------. Show Answer

Q67) The concept of gross barter terms of trade was introduced by ----------. Show Answer

Q68) The concept of income terms of trade was introduced by -----------. Show Answer

Q69) Utility terms of trade was introduced by -----------. Show Answer

Q70) The concept of offer curves was introduced by --------------. Show Answer

Q71) Terms of trade will be favourable to a country when---------. Show Answer

Q72) The offer curve of a country is based on ----------. Show Answer

Q73) A country will have unfavourable terms of trade when ----------. Show Answer

Q74) When supply of exports is elastic, a country will have --------- terms of trades. Show Answer

Q75) The concept of reciprocal demand was introduced by ----------. Show Answer

Q76) Reciprocal demand is expressed in terms of ---------. Show Answer

Q77) The classical theory of international trade was presented by ---------. Show Answer

Q78) Hecksher - Ohlin theory states that the relative factor prices in two countries are determined by -----------. Show Answer

Q79) Hecksher - Ohlin theory is also known as ------- theory of international trade. Show Answer

Q80) Under --------- type of cost difference, international trade will not take place. Show Answer

Q81) The higher the difference in cost ratios, the greater will be the gains from international trade, Show Answer

Q82) International trade brings in many dynamic gains. Show Answer

Q83) Comparative cost advantage theory cannot be extended to more than two countries. Show Answer

Q84) Ricardian theory can be explained in terms of labour units only and not in money terms. Show Answer

Q85) A country that enjoys comparative cost advantage in two commodities, yet it may specialize in the production of one commodity in which it enjoys greater comparative cost advantage. Show Answer

Q86) Comparative cost theory is based on cost of supply but ignores demand. Show Answer

Q87) The comparative cost theory is not applicable to the real world. Show Answer

Q88) Hecksher - Ohlin theory is based on unrealistic assumptions. Show Answer

Q89) Hecksher Ohlin theory is based on mutual interdependence of commodity and factor market. Show Answer

Q90) In Hecksher Ohlin theory, factor intensity is measured in absolute terms. Show Answer

Q91) Hecksher - Ohlin theory is disproved on the basis of Leontief's Paradox. Show Answer

Q92) According to Hecksher Ohlin theory, factor abundance results in low factor cost. Show Answer

Q93) According to Hecksher Ohlin theory, international trade is a special case of inter-regional trade. Show Answer

Q94) Commodity (net barter) terms of trade compares income from exports. Show Answer

Q95) Commodity terms of trade do not consider quality of goods. Show Answer

Q96) Gross barter terms of trade include items other than traded goods. Show Answer

Q97) Reciprocal demand does not affect terms of trade. Show Answer

Q98) Economic development affects terms of trade. Show Answer

Q99) Offer curves are demand and supply curves. Show Answer

Q100) International trade increases consumption level of participating countries. Show Answer

Q101) International trade increases welfare of only exporting nations. Show Answer

Q102) Intense demand for imports increases gains from trade. Show Answer

Q103) Gains from trade are not confined to economic aspects only. Show Answer

Q104) When price of exports is greater than the price of imports, the terms of trade will be favourable to the country. Show Answer

Q105) When a nation exports mainly primary goods, it will enjoy better terms of trade. Show Answer

Q106) Income terms of trade measures a nation's capacity to import from export income. Show Answer

Q107) Under _______ type of cost difference international trade will not take place Show Answer

Q108) The classical theory of international trade is based on assumption of ______ Show Answer

Q109) Bertil Ohin’s theory of international trade is also known as ______. Show Answer

Q110) Modern theory of international trade is based on the assumption of _____ Show Answer

Q111) The main cause of international trade according to Modern theory is _____ Show Answer

Q112) According to Modern theory relative factor prices in two countries are determined by _____. Show Answer

Q113) If the export price is greater than the import price, terms of trade will be _____ Show Answer

Q114) The NBTT considers Show Answer

Q115) GBTT considers Show Answer

Q116) _______ introduced the concept of GBTT . Show Answer

Q117) _______ introduced the concept of Income Terms of Trade Show Answer

Q118) The Income Terms of Trade reflects a country’s capacity to ______ Show Answer

Q119) Both single and double factoral terms of trade were developed by _______ Show Answer

Q120) The terms of trade index which takes into consideration the productivity index of not only export goods but also the productivity index of factors producing import goods is _____. Show Answer

Q121) When single factoral terms of trade is multiplied by the index of the amount of disutility per unit of productive resources used in producing exports, we get _____. Show Answer

Q122) Utility Terms of Trade was introduced by _____ Show Answer

Q123) International Trade leads to the following gains: Show Answer

Q124) Reciprocal demand is expressed in terms of _____ Show Answer

Q125) Gains from trade due to changes in technology and production function by which the production possibility curve shifts outwards are known as : Show Answer

Q126) Equilibrian terms of trade according to J.S. Mill is determined by the condition of _______. Show Answer

Q127) The offer curve of a country is based on _____ Show Answer

Q128) The concept of offer curves to explain the gains from trade was introduced by _____. Show Answer

Q129) According to Ricardo, international trade is beneficial under Show Answer

Q130) Ricardian theory assumes perfect mobility of labour Show Answer

Q131) Comparative cost theory is a static theory because according to it Show Answer

Q132) Ricardian theory measures comparative cost in terms of Show Answer

Q133) Ricardian theory assumes that Show Answer

Q134) Ricardian comparative cost theory can be extended or applied to Show Answer

Q135) International trade is trade across the political boundaries of the country. Show Answer

Q136) H.O. Theory can explain Show Answer

Q137) Commodity X is capital intensive if in its production Show Answer

Q138) International Trade Show Answer

Q139) According to H.O . theory the international trade takes place due to the difference in Show Answer

Q140) According to H.O. theory, product price depends on Show Answer

Q141) H.O. theory cannot be applied to more than Show Answer

Q142) Terms of trade are expressed as a Show Answer

Q143) Terms of trade are favourable, if the current index in comparision to the base year index is Show Answer

Q144) Gross barter terms of trade takes into account Show Answer

Q145) Income terms of trade tells increased capacity to Show Answer

Q146) Single factoral terms of trade takes into account changes in Show Answer

Q147) The developing countries, it is argued, usually Show Answer

Q148) Reciprocal demand is Show Answer

Q149) The gain from trade is maximum if the international terms of trade are Show Answer

Q150) An offer curve Show Answer

Q151) International trade increase the economic welfare of Show Answer

Q152) International trade Show Answer

Q153) Cultural changes due to international trade are always Show Answer

Q154) Internal trade is also known as intra-regional trade. Show Answer

Q155) International trade is also known as domestic trade. Show Answer

Q156) There is no need for a separate theory of international trade. Show Answer

Q157) The classical theory of international trade is also known as theory of comparative costs. Show Answer

Q158) If there are equal differences in production costs, international trade cannot take place. Show Answer

Q159) Ricardian theory is explained in terms of money. Show Answer

Q160) Reciprocal demand does not influence terms of trade. Show Answer

Q161) The modern theory of international trade was developed by David Ricardo. Show Answer

Q162) Capital-rich countries will export-capital-intensive goods and the labour-rich country labour-intensive goods. Show Answer

Q163) If the import price is greater than the export price, terms of trade will be Unfavorable to the country. Show Answer

Q164) Gross Barer Terms of trade is measured by the ratio of price of exports to price of imports Show Answer

Q165) The quantities of imports and exports are taken to measure the Net Barter Terms of Trade Show Answer

Q166) Net Barter Terms of Trade neglects the changes in the composition of trade and quality of goods traded Show Answer

Q167) The NBTT does not explain the behaviour of BOP Show Answer

Q168) NBTT consideration the changes in productivity of the export sector Show Answer

Q169) NBTT considers unilateral transactions. Show Answer

Q170) Gross Barter Terms of Trade considers capital movements and price changes. Show Answer

Q171) Prof. Taussing introduced the concept of income Terms of Trade Show Answer

Q172) The income terms of trade determines a country’s capital to export Show Answer

Q173) Jacob Viner developed the concept of single factoral terms of trade. Show Answer

Q174) Single factoral terms of trade takes into consideration the productivity of factors Show Answer

Q175) Double factoral terms of trade consideration only the productivity index of export goods Show Answer

Q176) Real least terms of trade is an improvement on single factoral terms of trade Show Answer

Q177) Multiplying the real cost terms of trade with the index of the relative utility of imports and the forgone commodities we get utility Terms of Trade. Show Answer

Q178) When the price of exports is grater than the price of imports, the terms of trade will become adverse for a country Show Answer

Q179) When the price of imports is greater than the price of exports of a country, the better will be the terms of trade enjoyed by it. Show Answer

Q180) The lesser the elasticity of demand for the exports a country, the better will be the terms of trade enjoyed by it. Show Answer

Q181) The higher the elasticity of demand for a country’s imports, the more favourable will be the terms of trade. Show Answer

Q182) When a country’s exports are more in the nature of primary goods, the better will be the terms of trade. Show Answer

Q183) The greater the difference in cost ratios of trading countries, the lesser will be the total gains from trade. Show Answer

Q184) H.O. theory is based on mutual interdependence of commodity and factor market Show Answer

Q185) International trade is but a special case of interregional trade Show Answer

Q186) Factor intensity is measured in absolute terms Show Answer

Q187) H.O. theory is disproved on the basis of Leontief Paradox Show Answer

Q188) Factors abundance results in low factor cost Show Answer

Q189) H.O. theory is also based on unrealistic assumptions Show Answer

Q190) Commodity terms of trade compares income from exports Show Answer

Q191) Commodity terms of trade do not consider quality of goods Show Answer

Q192) Gross barter terms of trade includes items other than traded goods. Show Answer

Q193) Reciprocal demand does not affect terms of trade Show Answer

Q194) Income terms of trade measures the capacity of a country to import from its export income Show Answer

Q195) Economic development does not affect terms of trade Show Answer

Q196) Offer curves are like demand and supply curves Show Answer

Q197) International Trade increase consumption level of participating countries Show Answer

Q198) International trade increase welfare of only exporting countries Show Answer

Q199) Intense demand for imports increases gains from trade Show Answer

Q200) Gains from trade are not confined to economic aspects only Show Answer

Q201) A primary reason why nations conduct international trade is because: Show Answer

Q202) A main advantage of specialization results from: Show Answer

Q203) International trade in goods and services is sometimes used as a substitute for all of the following except: Show Answer

Q204) If a nation has an open economy it means that the nation: Show Answer

Q205) International trade forces domestic firms to become more competitive in terms of: Show Answer

Q206) The movement to free international trade is most likely to generate short-term unemployment in which industries: Show Answer

Q207) International trade is based on the idea that: Show Answer

Q208) Arguments for free trade are sometimes disregarded by politicians because: Show Answer

Q209) Increased foreign competition tend to Show Answer

Q210) Free traders maintain that an open economy is advantageous in that it provides all of the following except: Show Answer

Q211) International trade in goods and services tends to: Show Answer

Q212) The real income of domestic producers and consumers can be increased by: Show Answer

Q213) Technological improvements are similar to international trade since they both: Show Answer

Q214) A sudden shift from import tariffs to free trade may induce short-term unemployment in: Show Answer

Q215) A country’s openness to international trade can be measured by the formula Show Answer

Q216) The earliest statement of the principle of comparative advantage is associated with: Show Answer

Q217) If the international terms of trade settle at a level that is between each country’s opportunity cost Show Answer

Q218) International trade is based on the notion that: Show Answer

Q219) The classical trade theories of Smith and Ricardo predict that Show Answer

Q220) According to the classical theory of international trade: Show Answer

Q221) In the classical model of Ricardo, the direction of trade is determined by: Show Answer

Q222) Absolute advantage is determined by: Show Answer

Q223) Comparative advantage is determined by: Show Answer

Q224) The Heckscher-Ohlin theory explains comparative advantage as the result of differences in countries’: Show Answer

Q225) The factor endowment model of international trade was developed by Show Answer

Q226) The trade model of the Swedish economists Heckscher and Ohlin maintains that: Show Answer

Q227) According to the factor endowment model of Heckscher and Ohlin, countries heavily endowed with land will: Show Answer

Q228) That the division of labor is limited by the size of the market best applies to which explanation of trade: Show Answer

Q229) Dynamic comparative advantage theory Show Answer

Q230) Declining costs per unit of output results from international trade especially if: Show Answer

Q231) According to the Heckscher-Ohlin model, the source of comparative advantage is a country’s: Show Answer

Q232) The Heckscher-Ohlin model rules out the classical model’s basis for trade by assuming that ________ is (are) identical between countries.
Show Answer

Q233) The comparative advantage model of Ricardo was based on Show Answer

Q234) The Heckscher-Ohlin theorem states that a country will have comparative advantage in the good whose production is relatively intensive in the ______ with which the country is relatively abundant. Show Answer

Q235) One of the predictions of the Heckscher-Ohlin model is that: Show Answer

Q236) The Heckscher-Ohlin assumes that _______ are identical between countries. Show Answer

Q237) According to the Heckscher-Ohlin model Show Answer