International Economics MCQ Test - 1: Introduction

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  1. Four which of the following groups of products does the U.S. rely exclusively on imports?

    1. Petroleum, coal, natural gas, wood

    2. coffee, tea, cocoa, tin

    3. copper, aluminum, iron, steel

    4. computers,

  2. One similarity between international and interregional trade is that in general both must overcome

    1. tariffs

    2. differences in language

    3. distance or space

    4. differences in currencies and monetary systems


  3. in the study of international economics we use the tools of

    1. microeconomic theory only

    2. macroeconomic theory only

    3. neither micro nor macro theory

    4. both micro and macro theory, but we also extend, adapt and integrate them


  4. With which of the following topics does international economics deal?

    1. International trade theory

    2. international trade policy

    3. the balance of payments

    4. adjustment to disequilibria in the balance of payments

    5. all of the above

  5. To which of the following would the mercantilists have ojected?

    1. Free trade

    2. stimulating exports

    3. restricting imports

    4. accumulation of gold by their nation


  6. We can best understand Smith's views on trade if we regard them as a reaction to

    1. a law of comparative advantage

    2. the mercantilist view on trade

    3. Ricardo's views on trade

    4. all of the above

    5. >

  7. What proportion of world trade is based on absolute advantage?

    1. All

    2. most

    3. some

    4. none


  8. The commodity in which a nation has the least absolute disadvantage represents its area of

    1. comparative disadvantage

    2. comparative advantage

    3. absolute advantage

    4. cannot say without additional information


  9. With reference to Table 1.2 in Example 4, we can sya that the U.S. has a comparative advantage over the U.K. in the production of wheat because 1 labor-hour in the U.S. is

    1. twice as productive in C as in W

    2. twice as productive in W as in C

    3. 1.5 times more productive in W but 6 times more productive in C as in the U.K.

    4. 6 times more productive in W but only 1.5 times more productive in C as in the U.K.


  10. With reference to table 1.2 and Examples 4 and 5, indicate which of the following statements is correct

    1. The rate at which W exchanges for C in production in the U.S. is 2:1

    2. The rate at which W exchanges for C in production in the U.K. is 1:2

    3. Tje rate at which W exchanges for C in trade between the U.S. and the U.K. is 1:1

    4. All of the above


  11. With reference to Example 5, indicate which of the following statements is correct

    1. The U.S. gains 3C by trading 6W for 6C with the U.K.

    2. The U.K. gains 6C by exchanging 6 of its 12C for 6W with the U.S.

    3. The increase in the combined output of the U.S. and the U.K. when 6W are exchanged for 6C is 9C and 0W

    4. All of the above


  12. Ricardo's law of comparative advantage is based on

    1. the opportunity cost theory

    2. the labor theory of value

    3. the law of diminishing returns

    4. all of the above


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