Explore topic-wise MCQs in Economics Mcqs.

This section includes 46 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.

G. MacDougal compared export ratios and labor productivity ratios for the United States and the United Kingdom in order to test the:
A. Ricardian theory of comparative
B. Heckscher Ohl in theory of comparative advantage
C. Linder theory of overlapping demand all of the above
D. None of these
Answer» B. Heckscher Ohl in theory of comparative advantage
Discussion
2.

If a country has a liner (downward sloping) production possibilities frontier, then production is said to be subjected to ?
A. constant opportunity costs
B. decreasing opportunity costs
C. first increasing and then decreasing opportunity costs
D. increasing opportunity costs
Answer» B. decreasing opportunity costs
Discussion
3.

According to the principle of comparative advantage ?
A. South Korea should export steel
B. South Korea should export steel and DVDs
C. Japan should export steel
D. Japan should export steel and DVDs
Answer» B. South Korea should export steel and DVDs
Discussion
4.

In autarky the relative price of wine, in terms of beer, in Country B is ?
A. 1W = 3B
B. 1W = 4 1/2B
C. 1W = 5B
D. 1W = 6B
Answer» C. 1W = 5B
Discussion
5.

Dynamic gains from trade could result from ?
A. The stimulus of additional investment spending as market open
B. Economies of large scale production as markets open
C. Additional competition made possible by the opening of markets
D. All of the above
Answer» E.
Discussion
6.

G. MecDougall showed in his tests that ?
A. relatively higher U.S labor productivity was associated with relatively higher U.K export ratios
B. relatively high U.K labor productivity was associated with relatively higher U.K export ratios
C. Labor productivity ratios and export ratios were not associated with each other
D. None of the above
Answer» C. Labor productivity ratios and export ratios were not associated with each other
Discussion
7.

Under free trade, Canada would not realize any gains from trade with Sweden if Canada ?
A. Trades at Canada’s marginal rate of transformation
B. Trade at Sweden’s marginal rate of transformation
C. Specializes completely in the production of its export good
D. Specializes partially in the production of its exports goods
Answer» B. Trade at Sweden’s marginal rate of transformation
Discussion
8.

In aukarky, when a community maximizes its standard of living, its production and consumption point is ?
A. below the production possibility frontier
B. On the production possibility frontier
C. above the production possibility frontier
D. can’t tell without more information
Answer» C. above the production possibility frontier
Discussion
9.

Which countries terms of trade improved between 1990 and 2000 ?
A. Mexico and Denmark
B. Sweden and Denmark
C. Sweden and Spain
D. Mexico and Sweden
Answer» E.
Discussion
10.

In autarky, when a community maximizes its standard of living its production point is ?
A. below the production possibility frontier
B. on the production possibility frontier
C. above the production possibility frontier
D. can’t tell without more information
Answer» C. above the production possibility frontier
Discussion
11.

International trade is based on the nation that ?
A. Different currencies are an obstacle to international trade
B. Goods are more mobile internationally than are resources
C. Resources are more mobile internationally that are goods
D. A country’s exports should always exceed its imports
Answer» C. Resources are more mobile internationally that are goods
Discussion
12.

Country A has an absolute advantage in__________?
A. Product X
B. Product Y
C. Neither X nor Y
D. Both X and Y
Answer» C. Neither X nor Y
Discussion
13.

If the relative price (MRT) of S were to increase, then the price line would ?
A. shift out in a parallel fashion
B. shift in a parallel fashion
C. Become steeper
D. Become flatter
Answer» D. Become flatter
Discussion
14.

The Relative price (MRT)of S in terms of T i ?
A. 2
B. 1/2
C. 100
D. 1000
Answer» C. 100
Discussion
15.

Country A has the comparative advantage in ?
A. Wine
B. Beer
C. Both wine and beer
D. Neither wine nor beer
Answer» B. Beer
Discussion
16.

In autarky, the relative price of wine, in terms of beer, in country A is ?
A. 1W = 1B
B. 1W = 2B
C. 1W = 3B
D. 1W = 1/3B
Answer» D. 1W = 1/3B
Discussion
17.

In autarky, the relative price of X, in terms of Y in A would be ?
A. 1/2 Y
B. 3/4 Y
C. 1 Y
D. 4/3 Y
Answer» E.
Discussion
18.

If the countries were to trade along the lines of absolute advantage ?
A. A would export X to B
B. B would import Y from A
C. Neither country would want to trade
D. None of the above
Answer» C. Neither country would want to trade
Discussion
19.

The opportunity cost of one DVD in South Korea is ?
A. One-half ton of steel
B. One ton of steel
C. One and one-half tons of steel
D. Two tons of steel
Answer» E.
Discussion
20.

G. MacDougall’s empirical results can be interpreted as ?
A. evidence against the classical model
B. evidence against the Heckscher-Ohlin model
C. Support for the Ricardian modal
D. Support for the Heckscher-Ohlin model
Answer» D. Support for the Heckscher-Ohlin model
Discussion
21.

John Stuart Mill was the founder of the ?
A. Theory of reciprocal demand
B. Theory of absolute advantage
C. Theory of comarative advantage
D. Theory of mercantilism
Answer» B. Theory of absolute advantage
Discussion
22.

In autarky equilibrium ?
A. Production equals consumption
B. Exports equal imports
C. there is no trade
D. All of the above
Answer» E.
Discussion
23.

If the autarky price of S were lower in country A than in country B then if trade were allowed ?
A. A would likely export S to B
B. A would likely import S from B
C. neither country would want to trade
D. None of the above
Answer» B. A would likely import S from B
Discussion
24.

Given free trade, small nations tend to benefit the most from trade since they ?
A. Are more productive than their large trading partners
B. Are less productive than their large trading partners
C. Have demand preferences and income levels lower than their large trading partners
D. Realize terms of trade lying near the MRTs of their large trading partners
Answer» E.
Discussion
25.

Country B has an absolute advantage in ?
A. Product X
B. Product Y
C. Neither X nor Y
D. Both X and Y
Answer» B. Product Y
Discussion
26.

Country A has an absolute advantage in ?
A. Beer
B. Wine
C. Both products
D. neither products
Answer» E.
Discussion
27.

Comparative advantage is determined by ?
A. actual differences in labor productivity between countries
B. relative differences in labor productivity between countries
C. Both (a) and (b)
D. Neither (a) nor (b)
Answer» C. Both (a) and (b)
Discussion
28.

If countries were to trade along the lines of comparative advantage ?
A. A would export X to B
B. A would export Y to B
C. Neither country would want to trade
D. None of the above
Answer» C. Neither country would want to trade
Discussion
29.

In the classical model of Ricardo, the direction of trade is determined by ?
A. Absolute advantage
B. Comparative advantage
C. Physical advantage
D. Which way the wind blows
Answer» C. Physical advantage
Discussion
30.

The gains from international trade are closely related to ?
A. The labor theory of value
B. How much the autarky price differs from international terms of trade change
C. The fact that a country must lose from trade
D. All of the above
Answer» C. The fact that a country must lose from trade
Discussion
31.

Mercantilism ?
A. Is the philosophy of free international trade?
B. Was a system of export promotion and barriers to imports practiced by governments?
C. Was praised by Adam Smith in the Wealth of Nations
D. Both (a) and (c)
Answer» C. Was praised by Adam Smith in the Wealth of Nations
Discussion
32.

If the international terms of trade settle at a level that is between each country’s opportunity cost ?
A. There is no basis for gainful trade for either country
B. Both countries gain from trade
C. Only one country gains from trade
D. One country gain and the other country loses from trade
Answer» C. Only one country gains from trade
Discussion
33.

The opportunity cost of one DVD in Japan is ?
A. One ton of steel
B. Two tons of steel
C. Three tons of steel
D. Four tons of steel
Answer» B. Two tons of steel
Discussion
34.

If Hong Kong and Taiwan have identical production possibilities curves that are subject to increasing opportunity costs ?
A. Trade would depend on difference in demand conditions
B. Trade would depend on economies of large-scale production
C. Trade would depend on the use of different currencies
D. There would be no basis for gainful trade
Answer» B. Trade would depend on economies of large-scale production
Discussion
35.

With International trade, what would be the maximum amount of steel that South Korea would be willing to export to Japan in exchange for each DVD ?
A. One-half ton of steel
B. One ton of steel
C. Two tons of steel
D. Two and one-half tons of steel
Answer» D. Two and one-half tons of steel
Discussion
36.

Country B has the comparative advantage in ?
A. Wine
B. Beer
C. Both wine and beer
D. Neither wine nor beer
Answer» E.
Discussion
37.

According to the Principle of absolute advantage Japan should ?
A. Export steel
B. Export DVDs
C. Exports steel and DVDs
D. There is no basis for gainful specialization and trade
Answer» E.
Discussion
38.

The earliest statement of the principle of comparative advantage is associated with ?
A. Adam Smith
B. David Ricardo
C. Eli Heckscher
D. Berti IOhlin
Answer» C. Eli Heckscher
Discussion
39.

With international trade, what would be the maximum number of DVDs that Japan would be willing to export to South Korea in exchange for each ton of steel ?
A. One DVD
B. Two DVDs
C. Three DVDs
D. Four DVDs
Answer» B. Two DVDs
Discussion
40.

Absolute advantage is determined by ?
A. actual differences in labor production between countries
B. relative differences in labor productivity between countries
C. Both (a) and (b)
D. Neither (a) nor (b)
Answer» B. relative differences in labor productivity between countries
Discussion
41.

The terms of trade is given by the prices ?
A. Paid for all goods exported by the home country
B. Received for all goods exported by the home country
C. Received for exports and paid for imports
D. Of primary products as opposed to manufactured products
Answer» D. Of primary products as opposed to manufactured products
Discussion
42.

According to the Classical theory of international trade ?
A. Only countries with low wages will export
B. Only countries with high wages will import
C. Countries with high wages will have higher prices
D. All of the above are false
Answer» E.
Discussion
43.

If a country has a bowed out (concave to the origin) production possibility frontier then production is said to be subject to ?
A. constant opportunity costs
B. decreasing opportunity costs
C. first increasing and then decreasing opportunity costs
D. increasing opportunity costs
Answer» E.
Discussion
44.

If the relative Price (MRT) of T were to increase, then the price line would ?
A. Shift out in a parallel fashion
B. shift in a parallel fashion
C. become steeper
D. Become flatter
Answer» E.
Discussion
45.

The classical trade theories of Smith and Ricardo predict that ?
A. Countries will completely specialize in the production of export goods
B. Considerable trade will occur between countries with different levels of technology
C. Small countries could obtain of the gains from trade when trading with large countries
D. All of the above
Answer» E.
Discussion
46.

The relative price (MRT) of T in terms of S is ?
A. 2
B. 1/2
C. 500
D. 1000
Answer» B. 1/2
Discussion