International Economics-Online Practice Exam 1
International Economics-Online Practice Exam 1

International Economics-Online Practice Exam 1

NET / SET Online Practice Exams

International Economics

Test

Multi-choice 1

Question

1. If two countries jointly cooperate and act as a single unit then

Answers

Both should play the tariff game

 Free trade will be the optimal policy

Each should levy a mutually agree upon tariff on imports from the other

One should levy optimum tariff while the other should not levy any tariff

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Question

2. A country’s offer curve will be straight line when its price elasticity of supply for exports is

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Negative

Infinitely large

Zero

Unity

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Question

3. The appropriate expenditure-switching policy to correct a deficit in the balance of payments is-

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Revaluation

Devaluation

Monetary policy

 Fiscal policy

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Question

4. As a result of imposition of tariff a nation’s offer curve will

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Remain at the original position

Shift towards the axis measuring its import goods

Shift towards the axis measuring its export goods

Become a straight line

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Question

5. In the real world, the automatic income, price and interest adjustment mechanisms, if allowed to operate, are likely to

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Work at cross purposes from each other and result in perverse adjustment

Work at cross purposes from each other and result in incomplete adjustment

Reinforce each other and result in complete adjustment

Reinforce each other but still result in incomplete adjustment

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Question

6. Which one of the following is not correct ?

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 A country can always run by levying a tariff even if the other country retaliates

The higher a country’s share of foreign trade, the larger is the scope for its optimum tariff

Developed countries are likely to gain more from exploiting a monopoly position by applying high tariffs

 The less developed countries are not likely to gain much from high tariffs and their optimum tariffs are likely to be quite low

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Question

7. If there is no retaliation from its trading partner, imposition of tariff by a country will-

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 Have a favourable effect on its balance of trade

 Bring about a decrease in unemployment

 Produce an expansionary effect on national income

All of the above 

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Question

8. A tariff can help in bringing down unemployment in a country (provided the other country does not retaliate) through-

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An expansionary effect on national income

Reducing imports and increasing demand for home produced goods

Exporting part of its unemployment to its trading partner

All of the above

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Question

9. The fundamental cause for the collapse of the Bretton Woods System is-

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 The liquidity problem

The adjustment problem

 The confidence problem

All of the above

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Question

10. Which of the following is not an agency of the World Bank?

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IDA

UNCTAD

MIGA

ICSID

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