Question Study Guide - MCQs - International Economics
1. Which of the following theories suggests that a country should specialise in the
production of goods in which it has an absolute advantage?
a) Comparative advantage theory
b) Absolute advantage theory
c) Factor proportions theory
d) Leontief paradox theory
2. According to the Linder hypothesis, international trade is primarily influenced by:
a) Comparative advantage
b) Factor endowments
c) Similarities in consumer preferences
d) Transportation costs
3. The Heckscher-Ohlin model argues that trade is driven by differences in:
a) Comparative advantage
b) Factor endowments
c) Production technology
d) Consumer preferences
4. In the context of international trade, what does the term "Dumping" refer to?
a) Selling goods abroad at a higher price than the domestic market
b) Selling goods abroad at a lower price than the domestic market
c) Exporting low-quality products
d) Subsidise domestic industries
5. Which international organisation is responsible for regulating and facilitating trade
negotiations among its member countries?
a) International Monetary Fund (IMF)
b) World Bank
c) World Trade Organization (WTO)
d) Organization for Economic Cooperation and Development (OECD)
1
, 6. According to the Balassa-Samuelson hypothesis, what factor can explain differences
in price levels between countries?
a) Differences in inflation rates
b) Differences in exchange rates
c) Differences in productivity
d) Differences in government policies
7. What is the term used to describe a situation where a country simultaneously
exports and imports similar types of goods?
a) Intra-industry trade
b) Inter-industry trade
c) Bilateral trade
d) Multilateral trade
8. Which economic concept refers to the ability of a country to produce a good or
service using fewer resources than another country?
a) Absolute advantage
b) Comparative advantage
c) Opportunity cost
d) Marginal cost
9. The concept of "Trade Imbalances" in international economics is associated with:
a) Differences in exchange rates
b) Differences in inflation rates
c) Differences in trade deficits and surpluses
d) Differences in GDP per capita
10. What is the primary objective of the General Agreement on Tariffs and Trade
(GATT)?
a) To promote environmental protection
b) To reduce trade barriers and promote free trade
c) To regulate international currency exchange rates
d) To provide financial assistance to developing countries
2
1. Which of the following theories suggests that a country should specialise in the
production of goods in which it has an absolute advantage?
a) Comparative advantage theory
b) Absolute advantage theory
c) Factor proportions theory
d) Leontief paradox theory
2. According to the Linder hypothesis, international trade is primarily influenced by:
a) Comparative advantage
b) Factor endowments
c) Similarities in consumer preferences
d) Transportation costs
3. The Heckscher-Ohlin model argues that trade is driven by differences in:
a) Comparative advantage
b) Factor endowments
c) Production technology
d) Consumer preferences
4. In the context of international trade, what does the term "Dumping" refer to?
a) Selling goods abroad at a higher price than the domestic market
b) Selling goods abroad at a lower price than the domestic market
c) Exporting low-quality products
d) Subsidise domestic industries
5. Which international organisation is responsible for regulating and facilitating trade
negotiations among its member countries?
a) International Monetary Fund (IMF)
b) World Bank
c) World Trade Organization (WTO)
d) Organization for Economic Cooperation and Development (OECD)
1
, 6. According to the Balassa-Samuelson hypothesis, what factor can explain differences
in price levels between countries?
a) Differences in inflation rates
b) Differences in exchange rates
c) Differences in productivity
d) Differences in government policies
7. What is the term used to describe a situation where a country simultaneously
exports and imports similar types of goods?
a) Intra-industry trade
b) Inter-industry trade
c) Bilateral trade
d) Multilateral trade
8. Which economic concept refers to the ability of a country to produce a good or
service using fewer resources than another country?
a) Absolute advantage
b) Comparative advantage
c) Opportunity cost
d) Marginal cost
9. The concept of "Trade Imbalances" in international economics is associated with:
a) Differences in exchange rates
b) Differences in inflation rates
c) Differences in trade deficits and surpluses
d) Differences in GDP per capita
10. What is the primary objective of the General Agreement on Tariffs and Trade
(GATT)?
a) To promote environmental protection
b) To reduce trade barriers and promote free trade
c) To regulate international currency exchange rates
d) To provide financial assistance to developing countries
2
