Economics MCQs

Option A: occurs when countries are granted most favored nation status

Option B: occurs when one country voluntarily agrees to reduce its exports to another country

Option C: occurs when two or more nations join to form a free-trade zone

Option D: Occurs when countries develop an acquired comparative advantage that makes their industries more competitive in international markets

Correct Answer: occurs when two or more nations join to form a free-trade zone ✔

Option A: employ many young or untrained workers

Option B: are competing with well-established overseas firms

Option C: are not yet large enough to achieve economies of scale

Option D: use a new technology

Correct Answer: are not yet large enough to achieve economies of scale ✔

Option A: a quota

Option B: dumping

Option C: a tariff

Option D: an export subsidy

Correct Answer: a quota ✔

Option A: technological change

Option B: competitions with foreign suppliers

Option C: development of tourism

Option D: lower tariffs

Correct Answer: competitions with foreign suppliers ✔

Option A: resource; resource

Option B: foreign exchange money

Option C: opportunity; opportunity

Option D: money; opportunity

Correct Answer: opportunity; opportunity ✔

Option A: The industrial policies of governments

Option B: different sizes of the countries

Option C: different factor endowment between countries

Option D: the different tastes and preferences of people in different countries

Correct Answer: different factor endowment between countries ✔

Option A: services and white-collar jobs

Option B: manufacturing and blue-collar jobs

Option C: natural resource extraction and mining jobs

Option D: agriculture and farming jobs

Correct Answer: services and white-collar jobs ✔

Option A: Import-competing industries

Option B: Industries that are only exporters

Option C: Industries that sell domestically as well as export

Option D: industries that neither import nor export

Correct Answer: Import-competing industries ✔

Option A: Imported, but not exported

Option B: Exported, but not imported

Option C: Imported and exported

Option D: Neither exported nor imported

Correct Answer: Imported and exported ✔

Option A: Increase all domestic costs and prices

Option B: Keep all domestic costs and prices at the same level

Option C: Lessen the amount of competition facing home manufacturers

Option D: Increase the amount of competition facing home manufacturers

Correct Answer: Increase the amount of competition facing home manufacturers ✔

Option A: Monopoly in the home market becomes an oligopoly in the world market

Option B: Oligopoly in the home market becomes a monopoly in the world market

Option C: Purely competitive firm in the home market becomes an oligopolist

Option D: purely competitive firm in the home market becomes a monopolist

Correct Answer: Monopoly in the home market becomes an oligopoly in the world market ✔

A. The less mobile the country’s resources
B. The more mobile the country’s resources
C. The lower the country’s initial living standard
The higher the country’s initial living standard

Correct Answer: A. The less mobile the country’s resources ✔

Option A: Increased competition for world producers

Option B: A wider selection of products for consumers

Option C: The utilization of the most efficient production methods

Option D: Relatively high wages levels for all domestic workers

Correct Answer: Relatively high wages levels for all domestic workers ✔

Option A: 5 percent

Option B: 10 percent

Option C: 25 percent

Option D: 55 percent

Correct Answer: 5 percent ✔

Option A: Canada

Option B: Germany

Option C: Mexico

Option D: United Kingdom

Correct Answer: Canada ✔

Option A: Maximizing domestic efficiency is not considered imports

Option B: Maximizing consumer welfare may not be a chief priority

Option C: There exist sound economic reasons for keeping one’s economy isolated from other economies

Option D: Economists tend to favor high protected domestic markets

Correct Answer: Maximizing consumer welfare may not be a chief priority ✔

Option A: Industries in which there are neither imports nor exports

Option B: Imports competing industries

Option C: Industries that sell to domestic and foreign buyers

Option D: Industries that sell to only foreign buyers

Correct Answer: Imports competing industries ✔

Option A: Allows private ownership of capital

Option B: Has flexible exchange rates

Option C: Has fixed exchange rates

Option D: conducts trade with other countries

Correct Answer: conducts trade with other countries ✔

Option A: Economies of large-scale production

Option B: The specializing country behaving as a monopoly

Option C: Smaller production runs resulting in lower unit costs

Option D: High wages paid to foreign workers

Correct Answer: Economies of large-scale production ✔

Option A: reschedule debt

Option B: get a loan from an international organization

Option C: default on the loan

Option D: any of the above

Correct Answer: any of the above ✔

Option A: exports, subsidies

Option B: exports, patents

Option C: imports, high tariffs or import quotas

Option D: imports, subsidies

Correct Answer: imports, high tariffs or import quotas ✔

Option A: The upward trend in commodity prices the stability of primary products real prices

Option B: The upward trend in commodity prices, the volatility of primary products real prices

Option C: The downward trend in commodity prices the stability of primary products real prices

Option D: The downward trend in commodity prices the volatility of primary products real prices

Correct Answer: The downward trend in commodity prices the volatility of primary products real prices ✔

Option A: resource scarcity

Option B: low levels of investment

Option C: low population

Option D: poor infrastructure

Correct Answer: low population ✔

Option A: high monetary growth high wages

Option B: high budget deficits devaluation

Option C: high monetary growth devaluation

Option D: Prices surge from an artificially low level to their equilibrium level the inflation tax is required a source of government revenue

Correct Answer: Prices surge from an artificially low level to their equilibrium level the inflation tax is required a source of government revenue ✔

Option A: imports, exports

Option B: the balance of trade, zero

Option C: The demand for currency the supply of currency

Option D: social marginal cost, social marginal benefit

Correct Answer: social marginal cost, social marginal benefit ✔

Option A: rise, rise

Option B: fall, rise

Option C: fall, fall

Option D: rise, fall

Correct Answer: fall, fall ✔

Option A: relative factor competition

Option B: relative factor mobility

Option C: relative factor substitution

Option D: relative factor endowments

Correct Answer: relative factor endowments ✔

Option A: differences in technology

Option B: differences in factor endowments

Option C: scale economies

Option D: All of the above

Correct Answer: All of the above ✔

Option A: The external value of the currency would tend to fall

Option B: The external value of the currency would tend to rise

Option C: The injections from trade are greater then the withdrawals

Option D: Aggregate demand is increasing

Correct Answer: The external value of the currency would tend to fall ✔

Option A: The government intervenes to influence the exchange rate

Option B: The exchange rate should adjust to equate the supply and demand of the currency

Option C: The Balance of payments should always be in surplus

Option D: The Balance of payments will always equal the government budget

Correct Answer: The exchange rate should adjust to equate the supply and demand of the currency ✔

Option A: Decrease the domestic price of a product

Option B: Increase government earnings from tax

Option C: Increase the quantity of imports

Option D: Decrease domestic production

Correct Answer: Increase the quantity of imports ✔

Option A: Comparative advantage

Option B: Comparative scale

Option C: Economies of advantage

Option D: Production possibility advantage

Correct Answer: Comparative advantage ✔

Option A: To protect infant industries

Option B: To increase the level of imports

Option C: To Protect strategic industries

Option D: To improve the balance of payments

Correct Answer: To increase the level of imports ✔

Option A: balance of trade

Option B: comparative advantage

Option C: balance of payments

Option D: terms of trade

Correct Answer: terms of trade ✔

Option A: common market

Option B: free trade area

Option C: customs union

Option D: federation

Correct Answer: customs union ✔

Option A: Comparative advantage is achieved

Option B: Price elasticity of imports is unity and tariff revenue is maximized

Option C: import prices are the same as export prices

Option D: marginal social cost equals marginal social benefit

Correct Answer: marginal social cost equals marginal social benefit ✔

Option A: Side payments

Option B: Tariffs

Option C: subsidies

Option D: export quotas

Correct Answer: subsidies ✔

Option A: The price of goods when they leave the producing country

Option B: a limit on the quantity of a good that can be imported into a country

Option C: a tax on imports

Option D: a government payment to encourage exports

Correct Answer: a tax on imports ✔

Option A: its opportunity costs; world opportunity costs

Option B: export prices; import prices

Option C: Value of exports; value of imports

Option D: its currency; other currencies

Correct Answer: export prices; import prices ✔

Option A: absolute advantage

Option B: mutual advantage

Option C: multilateral advantage

Option D: comparative advantage

Correct Answer: comparative advantage ✔

Option A: Ricardo Malthus theorem

Option B: Heckscher Ohlin theorem

Option C: Lucas-Laffer theorem

Option D: Friedman Samuelson theorem

Correct Answer: Heckscher Ohlin theorem ✔

Option A: Decreased productivity in U.S manufacturing

Option B: High incomes of American households

Option C: Relatively low interest rates in the United States

Option D: High levels of investment by American corporations

Correct Answer: Decreased productivity in U.S manufacturing ✔

Option A: Provide benefits for all producers and consumers

Option B: Increase the nation’s aggregate income

Option C: Reduce unemployment for all domestic workers

Option D: Ensure that industries can operate at less than full capacity

Correct Answer: B. Increase the nation’s aggregate income ✔

Option A: Technological progress, but not international trade

Option B: International trade but not technological progress

Option C: Technological Progress and international trade

Option D: Neither technological progress nor international trade

Correct Answer: Technological Progress and international trade ✔

Option A: Imported, but not exported

Option B: Exported, but not imported

Option C: Exported and imported

Option D: Neither imported not exported

Correct Answer: Exported and imported ✔

Option A: U.S firms shipping component production overseas

Option B: High profit levels for American corporations

Option C: Sluggish rates of productivity growth in the United States

Option D: High unemployment rates among America workers

Correct Answer: High profit levels for American corporations ✔

Option A: Canada

Option B: Mexico

Option C: China

Option D: North Korea

Correct Answer: North Korea ✔

Option A: Intensify inflationary pressure at home

Option B: Induce falling output per worker-hour for domestic workers

Option C: Place constraints on the wages of domestic workers

Option D: Increase profits of domestic import competing industries

Correct Answer: Place constraints on the wages of domestic workers ✔

Option A: Automobiles

Option B: Steel

Option C: Radios and TVs

Option D: Computer software

Correct Answer: Computer software ✔

Option A: Exports should exceed imports

Option B: imports should exceed exports

Option C: Resources are more mobile internationally than are goods

Option D: Resources are less mobile internationally than are goods

Correct Answer: Resources are less mobile internationally than are goods ✔

Option A: The introduction of new products

Option B: Product design and quality

Option C: Product price

Option D: All of the above

Correct Answer: All of the above ✔

Option A: International movements of capital

Option B: International movements of labor

Option C: International movements of technology

Option D: Domestic production of different goods and services

Correct Answer: Domestic production of different goods and services ✔

Option A: Some nations prefer to produce one thing while others produce another

Option B: Resources are not equally distributed to all trading nations

Option C: Trade enhances opportunities to accumulate profits

Option D: interest rates are not identical in all trading nations

Correct Answer: Resources are not equally distributed to all trading nations ✔

Option A: food, clothing and housing

Option B: health, education and quality housing

Option C: adequate nutrition, primary education health sanitation water supply and housing

Option D: longevity and living standards

Correct Answer: adequate nutrition, primary education health sanitation water supply and housing ✔

Option A: health and nutrition

Option B: living standard

Option C: infant mortality

Option D: Purchasing Power Parity

Correct Answer: health and nutrition ✔

Option A: infant mortality life expectancy and adult literacy rate

Option B: crime rate clean environment and quality of housing

Option C: air pollution rate, Water pollution rate and sanitation

Option D: health education and environment

Correct Answer: infant mortality life expectancy and adult literacy rate ✔

Option A: both exchange rates are measured s the domestic currency price of the US-dollar

Option B: both exchange rates are not converted into international dollars

Option C: both exchange rate are pegged

Option D: both exchange rate are converted into Big Mac PPP formula

Correct Answer: both exchange rates are measured s the domestic currency price of the US-dollar ✔

Option A: current-year

Option B: base-year

Option C: fisher-ideal index

Option D: Purchasing Power Parity (PPP)

Correct Answer: current-year ✔

Option A: Organization of Petroleum Exporting Country

Option B: Organization of Pre-European Commission

Option C: Oil Producing Economies Caucus

Option D: Organization of Problematic Economies Committee

Correct Answer: Organization of Petroleum Exporting Country ✔

Option A: NIC, OPEC and G7

Option B: Low income , middle income and high income

Option C: Southeast Northeast and Southwest

Option D: Asia, America and Europe

Correct Answer: Low income , middle income and high income ✔

Option A: Canada

Option B: United States

Option C: Mexico

Option D: Australia

Correct Answer: Mexico ✔

Option A: Ethiopia

Option B: Rwanda

Option C: Somalia

Option D: Singapore

Correct Answer: Singapore ✔

Option A: [(GDP2002 + GDP2001)/GDP2001]100

Option B: [(GDP2002 – GDP2001) GDP2001]100

Option C: [(GDP2002 – GDP2001)/GDP2001]100

Option D: [(GDP2001 – GDP2002]100

Correct Answer: C. [(GDP2002 – GDP2001)/GDP2001]100 ✔

Option A: 4%

Option B: 1.11%

Option C: 0.011%

Option D: 11%

Correct Answer: 1.11% ✔

Option A: 2000 – 890

Option B: 200/890

Option C: 200,000,000/890

Option D: 200

Correct Answer: 200,000,000/890 ✔

Option A: Indonesia

Option B: India

Option C: Malaysia

Option D: Nigeria

Correct Answer: Malaysia ✔

Option A: [(GDPc – GDPp)/ DGPp]100

Option B: [(GDPc – GDPp) DGPp]100

Option C: GNPc – DGPp100)

Option D: [GDPp – GDPc]100

Correct Answer: A. [(GDPc – GDPp)/ DGPp]100 ✔

Option A: 1000

Option B: 260

Option C: 0.001

Option D: 259740

Correct Answer: 1000 ✔

Option A: P = ΣPnqn/Σpoqn

Option B: P = ΣPoqo/Σpnqn

Option C: P = ΣPnqo/Σpoqo

Option D: P = ΣPnqn/Σpoqo

Correct Answer: P = ΣPnqn/Σpoqn ✔

Option A: equality

Option B: poverty

Option C: employment

Option D: human development

Correct Answer: poverty ✔

Option A: Most LDCs have less than 1/10 the per capita GNP of the U.S

Option B: A greater share of GNP would have to be devoted to education to attain the same primary enrollment rates as in the U.S

Option C: Setting up western labor standard and minimum wages in labor-abundant LDCs is sensible

Option D: Most LDCs have a greater shortage of qualified teachers than the U.S does

Correct Answer: Setting up western labor standard and minimum wages in labor-abundant LDCs is sensible ✔

Option A: Japan

Option B: South Korea

Option C: Taiwan

Option D: Singapore

Correct Answer: Japan ✔

Option A: disparity reduction rate, human resource development rate and the composite index

Option B: longevity, education and living standard

Option C: minimum schooling, adult literacy and tertiary educational attainment

Option D: human resource training development and R&D

Correct Answer: longevity, education and living standard ✔

Option A: Purchasing Power Parity

Option B: Physical Quality of Life Index

Option C: Human Development Index

Option D: The Laspeyres index

Correct Answer: Physical Quality of Life Index ✔

Option A: is defined as the annual number of deaths of infant under 1 year old per 1,000 live births

Option B: reflects the availability of primary education the rights of employments and social security

Option C: is life expectancy up to age 3

Option D: reflects the availability of hospitals and childcare facilities and the parents wealth

Correct Answer: is defined as the annual number of deaths of infant under 1 year old per 1,000 live births ✔

Option A: a theory that tells us that exchanged rates between currencies are in equilibrium when their purchasing power is the same in both countries

Option B: GDP divided by exchange rate

Option C: a measure of income inequality

Option D: a measure of infant mortality in developing countries

Correct Answer: a theory that tells us that exchanged rates between currencies are in equilibrium when their purchasing power is the same in both countries ✔

Option A: GNP is understated for developed countries, since a number of items included in their national incomes are intermediate goods

Option B: The economic contribution of a housewife is a peasant family may not be measured is GNP is poor country

Option C: GNP in understated for developing countries since many of their labor intensive good have no impact on exchange rate since they are not traded

Option D: GNP is overstated for for countries where the price of foreign exchange is less than market clearing price

Correct Answer: GNP is understated for developed countries, since a number of items included in their national incomes are intermediate goods ✔

Option A: P = ∑Poqo/∑poqo

Option B: P = ∑Poqo/∑pnqn

Option C: P = ∑Pnqo/∑poqo

Option D: P = ∑Poqn/∑poqo

Correct Answer: P = ∑Pnqo/∑poqo ✔

Option A: less than $900, $900-$9000 and more than $9000

Option B: less than $5000, $5000-$15000 and more than $15000

Option C: less than $100, $100-$1000 and more than $1000

Option D: less than $5000, $5000-$150000 and more than $150000

Correct Answer: less than $900, $900-$9000 and more than $9000 ✔

Option A: United Arab Emirates

Option B: Armenia

Option C: Sudan

Option D: Bangladesh

Correct Answer: United Arab Emirates ✔

Option A: the United Kingdom

Option B: Singapore

Option C: Japan

Option D: Hungary

Correct Answer: Hungary ✔

Option A: The boundary between rich and poor countries has become clearer in 1990s

Option B: The fastest growing countries must be the ones with the highest per capita GNP

Option C: A few poor countries like South Korea and Malaysia in the 1950s grew much more rapidly than some higher-income countries like Uruguay and New Zealand

Option D: Today all high and Upper-middle income countries are Western.

Correct Answer: A few poor countries like South Korea and Malaysia in the 1950s grew much more rapidly than some higher-income countries like Uruguay and New Zealand ✔

Option A: 276,000

Option B: 1576,086

Option C: 0.276

Option D: 3.623

Correct Answer: 276,000 ✔

Option A: 6500

Option B: 130

Option C: 0.0065

Option D: 650

Correct Answer: 6500 ✔

Option A: economic growth

Option B: economic growth plus changes in (c) output distribution and economic structure

Option C: improvement in the well-being of the urban population

Option D: sustainable increase in Gross National Product

Correct Answer: economic growth ✔

Option A: Singapore

Option B: U.K

Option C: Japan

Option D: South Africa

Correct Answer: South Africa ✔

Option A: 5%

Option B: 0.901%

Option C: 0.090%

Option D: 0.991%

Correct Answer: 0.901% ✔

Option A: 9700 (1978 / 2005)

Option B: 300 / 360

Option C: 300 000 000 / 9700

Option D: 32.333

Correct Answer: 300 000 000 / 9700 ✔

Option A: current period

Option B: base-period

Option C: forecasting

Option D: future year

Correct Answer: future year ✔

Option A: reduce

Option B: increase

Option C: do not change

Option D: None of the above

Correct Answer: reduce ✔

Option A: MPC and MPT

Option B: MPT and MPZ

Option C: MPC and MPZ

Option D: MPC, MPT and MPZ

Correct Answer: MPT and MPZ ✔

Option A: booms, booms

Option B: recession, recession

Option C: booms, recessions

Option D: recessions, booms

Correct Answer: recessions, booms ✔

Option A: leave output unchanged

Option B: increase output

Option C: reduce output

Option D: increase the MPC

Correct Answer: increase output ✔

Option A: market imperfection

Option B: the law of diminishing returns

Option C: the paradox of thrift

Option D: market failure

Correct Answer: the paradox of thrift ✔

Option A: 1(1-MPC)

Option B: 1/MPS

Option C: 1/MPC

Option D: a or b

Correct Answer: a or b ✔

Option A: marginal propensity to invest

Option B: disposable incomes

Option C: marginal propensity to consume

Option D: average propensity to consume

Correct Answer: marginal propensity to consume ✔

Option A: is less than

Option B: equals

Option C: is greater than

Option D: fluctuates around

Correct Answer: equals ✔

Option A: tax evasion

Option B: poor statistics

Option C: the lags between statistical collection and publication

Option D: smuggling

Correct Answer: tax evasion ✔

Option A: including non-market activities

Option B: adjusted for inflation

Option C: including externalities

Option D: including tax evasion

Correct Answer: adjusted for inflation ✔

Option A: equal

Option B: be less than

Option C: be greater than

Option D: be less or greater than

Correct Answer: equal ✔