All Economics MCQs

Question 1

Compared to a portfolio composed entirely of shares a portfolio that is 50 percent government bonds and 50 percent shares will have a ?

Accepted Answer

lower return and a lower level or risk

Answer

lower return and a higher level of risk

Answer

higher return and a lower level or risk

Answer

higher return and a higher level of risk

Question 2

Idiosyncratic risk is the ?

Accepted Answer

uncertainty associated with specific companies

Answer

uncertainty associated with the entire economy

Answer

risk associated with adverse selection

Answer

risk associated with moral hazard

Question 3

Which of the following does not help reduce the risk that people face ?

Accepted Answer

increasing the rate of return within their portfolio

Answer

diversifying their portfolio

Answer

All of these answers help reduce risk

Answer

buying insurance

Question 4

JCB (Which makes agricultural and construction equipment) has the opportunity to purchase a new factory today that will provide them with a Rs50 million return four years from now If prevailing interest rates are 6 percent, what is the maximum that the project can cost for JCB to be willing to undertake the project ?

Accepted Answer

Rs 39,604,682

Answer

Rs 43,456,838

Answer

Rs 53,406,002

Answer

Rs 34,538,902

Question 5

The amount today that would be needed, at prevailing interest rates, to produce a particular sum in the future is known as ?

Accepted Answer

present value

Answer

future value

Answer

fair value

Answer

compound value

Answer

beginning value

Question 6

According to the factor price equalization theorem, the ________ factor should oppose free. trade policies in any given country?

Accepted Answer

scarce

Answer

abundant

Answer

neither

Answer

can't tell without more information

Question 7

By adjusting the model of comparative advantage to include transportation costs along with production costs we would expect ?

Accepted Answer

The volume of trade to be less than when there are no transportation costs

Answer

The prices of trade goods to be lower than when there are no transportation costs

Answer

specialization to stop when the production costs of the trading partners equalize

Answer

The gains from trade to be greater than when there are no transportation costs

Question 8

Advocates of industrial policy maintain that government should ?

Accepted Answer

grant subsidies to firms offering potential comparative advantage

Answer

pursue free trade as a policy that leads to maximum global efficiency

Answer

provide loans to domestic workers in exporting industries

Answer

increase interest rates on loans made to firms in import-competing industries

Question 9

In his empirical test of comparative advantage Wassily Leontief found that ?

Accepted Answer

None of the above

Answer

U.S exports are capital intensive relative to U.S imports

Answer

U.S imports are labor intensive relative to U.S exports

Answer

U.S exports are neither labor nor capital intensive

Question 10

The Heckshcer-Ohl assumes that are indentical between countries?

Accepted Answer

Both A and B

Answer

tastes and preferences

Answer

technology levels

Answer

factor indowments

Question 11

One of the predictions of the Heckscher-Ohlin model is that ?

Accepted Answer

All of the above

Answer

countries with different factor endowments but similar technologies and preferences will have a strong basis for trade with each other

Answer

countries with tend to specialize but not completely in their comparative advantage good

Answer

reciprocal demand leads to an equilibrium terms of trade by inducing change in both demand and supply

Question 12

If tastes are identical between countries, then comparative advantage is determined by ?

Accepted Answer

supply condition only

Answer

demand conditions only

Answer

supply and demand conditions

Answer

can't tell without more information

Question 13

Industrial policies intended to foster comparative advantage for domestic industries could result in the implementation of ?

Accepted Answer

All of the above

Answer

research and development subsidies

Answer

loan guarantees

Answer

low interest rate loans

Question 14

The product cycle theory of trade is essentially a ?

Accepted Answer

dynamic long run trade theory

Answer

static, short run trade theory

Answer

zero-sum theory of trade

Answer

negative-sum theory of trade

Question 15

The Heckscher-Ohl in model rules out the classical model's basis for trade by assuming that _________ is (are) identical between countries?

Accepted Answer

technology

Answer

factor endowments

Answer

factor intensities

Answer

opportunity costs

Question 16

Declining costs per unit of output results from international trade especially if ?

Accepted Answer

Economies of scale exist for producers

Answer

International trade affords producers monopoly power

Answer

National governments levy imports tariffs and quotas

Answer

Producing goods entails increasing costs

Question 17

Dynamic comparative advantage theory ?

Accepted Answer

helps explain why some nations use industrial policy to support potentially competitive new firms

Answer

cannot explain strategic competition between firms such as Boeing and Airbus

Answer

Is another name for Ricardo's comparative advantage theory?

Answer

None of the above

Question 18

That the division of labor is limited by the size of the market best applies to which explanation of trade ?

Accepted Answer

Economies of scale theory

Answer

Factor endowment theory

Answer

Product life cycle theory

Answer

Overlapping demand theory

Question 19

_____ 1954 study of U.S trade patterns showed that U.S exports were labor-intensive compared with U.S imports, even though the United States was widely regarded as a relatively capital-abundant nation ?

Accepted Answer

Wassily Leontief's

Answer

Paul Samuelson's

Answer

Wolfgang Stolpher's

Answer

Staffan Linder's

Question 20

For the United States empirical studies indicate that over the past two hundred years the cost of international transportation relative to the value of U.S imports has ?

Accepted Answer

Decreased

Answer

increased

Answer

Not changed

Answer

Any of the above

All Free Economics MCQs with Answers