Practice_MCQ_on_Chapter_5_6_7

Practice_MCQ_on_Chapter_5_6_7 - Chapter 5: 1) The concept...

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Chapter 5: 1) The concept terms of trade means ʺ ʺ A) the amount of exports sold by a country. B) the price conditions bargained for in international markets. C) the price of a country s exports divided by the price of its imports. ʹ D) the quantities of imports received in free trade. E) None of the above. 2) A country cannot produce a mix of products with a higher value than where A) the isovalue line intersects the production possibility frontier. B) the isovalue line is tangent to the production possibility frontier. C) the isovalue line is above the production possibility frontier. D) the isovalue line is below the production possibility frontier. E) the isovalue line is tangent with the indifference curve. 3) If PC/PF were to increase in the international marketplace, then A) all countries would be better off. B) the terms of trade of cloth exporters improve. C) the terms of trade of food exporters improve. D) the terms of trade of all countries improve. E) None of the above. 4) A country will be able to consume a bundle which is not attainable solely from domestic production only if A) the world terms of trade differ from its domestic relative costs. B) the country specializes in one product. C) the country avoids international trade. D) the world terms of trade equal the domestic relative costs. E) None of the above. 5) If a small country were to levy a tariff on its imports then this would A) have no effect on that country s economic welfare. ʹ B) increase the country s economic welfare. ʹ C) decrease the country s economic welfare. ʹ D) change the terms of trade. E) None of the above. 6) Suppose now that Home experiences growth strongly biased toward its export, cloth, A) this will tend to worsen Home s terms of trade. ʹ B) this will tend to improve Home s terms of trade. ʹ C) this will tend to worsen Foreign s terms of trade. ʹ D) this will have no effect on Foreign s terms of trade. ʹ E) None of the above.
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7) When the production possibility frontier shifts out relatively more in one direction, we have A) biased growth. B) unbiased growth. C) immiserizing growth. D) balanced growth. E) imbalanced growth. 8) Export-biased growth in Country H will A) improve the terms of trade of Country H. B) trigger anti-bias regulations of the WTO. C) worsen the terms of trade of Country F (the trade partner). D) improve the terms of trade of Country F. E) decrease economic welfare in Country H. 9) If the U.S. has a higher marginal propensity to consume (MPC) imports as compared to both its MPC for exportables and nontradables, then such aid will A) worsen the U.S. terms of trade. B) improve the U.S. terms of trade. C) leave the world terms of trade unaffected. D) worsen the terms of trade of both donor and recipient countries.
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Practice_MCQ_on_Chapter_5_6_7 - Chapter 5: 1) The concept...

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