MCQOPTIONS

Explore topic-wise MCQs in Economics Mcqs.

This section includes 19 Mcqs, each offering curated multiple-choice questions to sharpen your Economics Mcqs knowledge and support exam preparation. Choose a topic below to get started.

1.	Which of the following statement is NOT true about OECD aid ?
A.	During the 1980s OECD countries contributed four fifths of the world’s bilateral official development assistance to LDCs
B.	In the early 1990s the OECD contributed 98 percent of all aid
C.	The OECD aid increased from $6.9 billion in 1970 to $8.9 billion in 2001
D.	In 2001, only Denmark Norway, Sweden, the Netherlands, and Luxembourg exceeded the aid target for LDCs
Answer» D. In 2001, only Denmark Norway, Sweden, the Netherlands, and Luxembourg exceeded the aid target for LDCs

2.	I = S + F The equation above states that a country can increase its new capital formation (or investment) through is ?
A.	own domestic savings and by inflows of capital from abroad
B.	stock market and fiscal policy
C.	savings from abroad and financial outflow
D.	savings and financial liberalization
Answer» B. stock market and fiscal policy

3.	Japan’s programs ? I- are understaffed politically muddled and administratively complex II- are biased toward Asia III- go primarily to less developed countries in Africa IV- focus on loans and the grant element of aid is low
A.	I, II and III
B.	I, II and IV
C.	II, III and IV
D.	I, II, III and IV
Answer» C. II, III and IV

4.	Hollis Chenery and Alan Strout identity three development stages in which growth proceeds at the highest rate permitted by the most limiting factors These factors are ? I- the skill limit II- the savings gap III- the fiscal gap IV- the foreign exchange gap
A.	I and II only
B.	II and IV only
C.	I, II and III only
D.	I, II and IV only
Answer» E.

5.	For Harvard’s Dani Rodrik Globalization involves ?
A.	decreasing autonomy of the nation-state involves
B.	the increasing international integration of markets for goods services and capital
C.	changes of a traditional culture of a country to a western culture
D.	giving aid to poor countries to improve their economy politics and social status
Answer» C. changes of a traditional culture of a country to a western culture

6.	U.S total official development assistance to developing countries is ?
A.	lowest among the OECD countries
B.	higher currently than it was in the 1960s and 1970s
C.	is equivalent to Holland’s aid
D.	None of the above statements is true
Answer» E.

7.	The U.S real food aid, as well as food reserves dropped from the 1960s to the 1980s partly because ?
A.	the transportation and storage cost increased tremendously
B.	proponents of basic-needs attainment opposed food-aid
C.	U.S farm interests wanted to reduce surplus grain stocks
D.	agricultural production suffered excessively due to weather changes
Answer» D. agricultural production suffered excessively due to weather changes

8.	Carmen Reinhart and Kenneth Rogoff explain the paradox of capital flows from poor to rich countries by ?
A.	the brain drains from LDCs to DCs
B.	the price role of political and credit-market risk in many LDCs
C.	the law of increasing returns that implies that the marginal productivity of capital is higher in LDCs
D.	the fat that the DC capital market is perfectly competitive
Answer» C. the law of increasing returns that implies that the marginal productivity of capital is higher in LDCs

9.	Some economists and third-world policy makers criticize MNCs arguing that they have a negative effect on the developing country because they ? I- increasing the LDC’s technological dependence on foreign sources resulting in less technological innovation by local workers II- Hamper local entrepreneurship and investment in infant industries III- increase unemployment rates from unsuitable technology IV- Restrict subsidiary exports when they undercut the market of the parent company
A.	I and II only
B.	III and IV only
C.	I, II and III only
D.	I, II, III and IV
Answer» E.

10.	MNCs can help the developing country to ? I- Finance a savings gap or balance of payments deficit II- Obtain foreign technology by adapting existing processes III- Generate appropriate technology by adapting existing processes IV- Employ domestic labor, especially in skilled jobs
A.	I and II only
B.	III and IV only
C.	I, II and III only
D.	I, II, III and IV
Answer» E.

11.	Bilateral aid ?
A.	is technical aid given by IMF
B.	is given directly by one country to another
C.	is aid with repayment in inconvertible currency
D.	is a loan at bankers’ standards
Answer» C. is aid with repayment in inconvertible currency

12.	The balance on current account ? I- equals the absolute value of the balance on capital account II- is financed by savings III- is net grants minus remittances IV- includes goods services and unilateral transfers
A.	I and II only
B.	II and III only
C.	I and IV only
D.	None of the above
Answer» D. None of the above

13.	Columbia’s Jagdish Bhagwati criticizes United States administrations inability to distinguish between benefits of free trade ?
A.	and the dangers of free capital movements for LDCs with poorly developed financial institutions
B.	and the dangers of a trade deficit
C.	and the external openness of income growth among the poorest 40 percent of LDCs
D.	and MNC domination and its effects on income distribution
Answer» B. and the dangers of a trade deficit

14.	In a portfolio investment ?
A.	investors are directly involved in managing the operations
B.	as in direct investment investors export goods and services abroad
C.	investors transfer the technology to local investors
D.	investors have no control over operations
Answer» E.

15.	An annual summary of country’s international economic and financial transactions is ?
A.	the capital accounts
B.	the international balance of payments statements
C.	the long-term current account
D.	the trade accounts
Answer» C. the long-term current account

16.	The IMF is an agency charged with providing ?
A.	technical assistance to stock market and financial market problems
B.	loans for post-World War II reconstruction
C.	short-term credit for international balance of payments deficits
D.	bonds denominated in U.S dollars as a loan to LDCs
Answer» D. bonds denominated in U.S dollars as a loan to LDCs

17.	Barro and Lee find that ceteris paribus, IMF lending has ?
A.	negative effect on economic growth during the simultaneous five-year period but has a significantly positive effect on growth in the subsequent five y
B.	no effect on economic growth during the simultaneous five-year period but has a significantly negative effect on growth in the subsequent five years
C.	a significantly positive effect on growth in the subsequent five years
D.	an exponentially negative effect on growth ten years
Answer» C. a significantly positive effect on growth in the subsequent five years

18.	Dani Rodrik points out that ?
A.	an economy more open to foreign trade and investment faces a more inelastic demand for unskilled workers
B.	employers and consumers can more readily replace domestic workers with foreign workers by investing abroad or buying imports
C.	globalization increases job insecurity
D.	financial liberalization in LDCs leads to collapse of the economy
Answer» D. financial liberalization in LDCs leads to collapse of the economy

19.	Aid or official development assistance (ODA) includes ? I- developments grants II- loans with at least 25 percent grant element III- military assistance IV- technical cooperation
A.	I and II only
B.	I, II and III only
C.	I, II and IV only
D.	I, II, III and IV only
Answer» D. I, II, III and IV only