All Free Economics MCQs with Answers

• A. Kennedy Round of 1964-1967
• B. Tokyo Round of 1973-1979
• C. Uruguay Round of 1986-1993
• D. Doha Round of 2003-2007

Explanation: The Uruguay Round, conducted from 1986 to 1993, concluded with the Marrakesh Agreement, which created the World Trade Organization in…

• A. embargoes
• B. tariff-rate quotas
• C. voluntary export restraints
• D. nontariff barriers

Explanation: An embargo is a complete prohibition on specified trade, so it can be viewed as a quota of zero.

• A. increase
• B. decrease
• C. not change
• D. None of These

Explanation: Dumping gives German consumers access to steel at unusually low prices, and this consumer gain normally exceeds the loss to German steel…

• A. Canada
• B. Australia
• C. Japan
• D. China

Explanation: In the commonly cited U.S. trade-policy context, China has been identified as the leading violator or source of…

• A. General Agreement on Tariffs and Trade
• B. World Trade Organization
• C. Smoot Hawley Organization
• D. McKinley Agreement on Trade policy

Explanation: The General Agreement on Tariffs and Trade was the first major postwar framework for reducing tariffs and liberalizing trade.

• A. bilateral tariff reductions to promote trade liberalization
• B. the use of the most-favored nation clause (normal trade relations)
• C. nondiscrimination in trading relationships
• D. the prohibition of import quotas and export quotas

Explanation: The WTO is built on multilateral, not merely bilateral, trade negotiations and nondiscrimination through most-favored-nation treatment.

• A. foreign dumping of goods in the U.S
• B. subsidies granted to foreign firms that export to the U.S
• C. buy national policies of foreign government
• D. stringent environmental regulations of foreign government s

Explanation: Countervailing duties neutralize the benefit foreign exporters receive from government subsidies, preventing those subsidized goods from…

• A. charge the nation's products a lower tariff than any other nation's
• B. charge that nation's products a tariff rate no higher than that on any other nation
• C. charge that nation's products a higher tariff than any other nation's
• D. exports to that nation any products that it wants to purchase

Explanation: Most-favored-nation treatment means a country must give the partner the same lowest tariff treatment it gives to any other nation, subject…

• A. Grain prices would rise in the Soviet union
• B. Consumer surplus would decrease for the soviets
• C. Grains prices would rise in the united States
• D. Export revenues would decrease for U.S producers

Explanation: Restricting U.S. grain exports reduces demand in the U.S. market, so U.S. grain prices would tend to fall rather than rise.

• A. Cost ratios are different
• B. Tariff rates are different
• C. Price ratios are different
• D. A and C of above

Explanation: Trade creates gains when countries face different opportunity-cost ratios, which produce different relative price ratios and allow…

• A. Policy about markets
• B. Policy about money supply
• C. Policy about imports and exports
• D. Policy of controlling of prices of goods

Explanation: Commercial policy covers a country's rules governing international trade, especially imports, exports, tariffs, quotas and related…

• A. Increase the volume of trade
• B. Reduces the volume of trade
• C. Has no effect on volume of trade?
• D. A and C of above

Explanation: A tariff raises the domestic price of imported goods, reducing the quantity demanded of imports and therefore the volume of international…

• A. Price increase demand decreases
• B. Price decreases demand decreases
• C. Price increased demand increases
• D. None of these

Explanation: The law of demand states that, other things remaining constant, a rise in price causes quantity demanded to fall.

• A. Changes in price caused by changes in demand
• B. The rate of change of sales
• C. The responsiveness of demand to price changes
• D. The value of sales at a given price

Explanation: Price elasticity of demand measures how strongly the quantity demanded responds to a change in price.

• A. Increasing government spending
• B. Increasing public ownership of firms
• C. Increasing the role of markets
• D. Removing the profit motive

Explanation: Central planning allocates resources through government decisions, whereas markets coordinate production through prices and private…

• A. A new investor
• B. A old investor
• C. A member of the stock exchange who cannot meet his obligations
• D. None of the above

Explanation: In stock-market terminology, a lame duck is a member who cannot fulfil financial obligations arising from transactions.

• A. Reliance Industries Ltd.
• B. British Gas
• C. General Motors
• D. State Bank

Explanation: Reliance Industries has historically been reported as holding the record for the largest number of shareholders among the listed companies…

• A. Milton Friedman
• B. Adam smith
• C. Alfred Marshal
• D. Karl Marx

Explanation: The statement is associated with Milton Friedman’s view that a business’s primary economic responsibility is to conduct business…

• A. interest
• B. Profit
• C. rent
• D. wages

Explanation: Profit is the reward earned by the entrepreneur for organising production and bearing business risk.

• A. Capital
• B. Interest
• C. Profit
• D. None of these

Explanation: Capital is a factor of production because tools, machinery, buildings and equipment help produce goods and services.