All Free Economics MCQs with Answers
Every Economics question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.
4,037 questions · page 86 of 202
- A. relatively small; more difficult
- B. relatively small; easier
- C. relatively large; more difficult
- D. relatively large; easier
Explanation: A producer quota is more effective when member countries control a large share of world output, since non-members cannot easily replace…
Correct answer: relatively large; easier- A. relatively greater then
- B. relatively less than
- C. the same as
- D. any of the above
Explanation: With highly inelastic demand, a change in supply produces a relatively large price response but only a small quantity response.
Correct answer: relatively greater then- A. Px/Pm
- B. Pm/Px
- C. (Pm/Px)Qm
- D. (Px/Pm)Qx
Explanation: The net barter terms of trade are measured by the export price index divided by the import price index, Px/Pm.
Correct answer: Px/Pm- A. absolute advantage
- B. comparative advantage
- C. export-led growth
- D. import substitution
Explanation: Import-substitution policies promote domestic manufacturing by restricting imports through tariffs, quotas, or similar barriers.
Correct answer: import substitution- A. resource allocation based on the principle of absolute advantage
- B. resource allocation based on the principle of comparative advantage
- C. trade protection for import-competing firms
- D. trade protection for exporting-competing firms
Explanation: Export-led growth encourages production in industries where a country has a comparative advantage, meaning a lower opportunity cost…
Correct answer: resource allocation based on the principle of comparative advantage- A. the principle of comparative advantage
- B. the principle of absolute advantage
- C. an outward-looking growth strategy
- D. an inward-looking growth strategy
Explanation: Import substitution focuses on producing domestically what was previously imported, using barriers to reduce dependence on foreign goods.
Correct answer: an inward-looking growth strategy1707. Because supply and demand conditions for primary products are very price inelastic their prices ?
- A. have been steadily rising in recent decades
- B. have been more stable than the prices of manufactured goods
- C. fluctuate about as much as the prices of manufactured goods
- D. tend to be very unstable from year to year
Explanation: With price-inelastic supply and demand, even small changes in production or demand can cause large price movements.
Correct answer: tend to be very unstable from year to year- A. multilateral contracts
- B. production and export controls
- C. buffer stock arrangements
- D. tariff-rates quotas
Explanation: Multilateral contracts, production or export controls, and buffer stocks have all been used to reduce export-price instability.
Correct answer: tariff-rates quotas- A. a lack of substitutes for oil
- B. similar cost schedules for member countries
- C. highly inelastic world demand curve for oil
- D. economic recession for oil importing nations
Explanation: An economic recession in oil-importing countries reduces oil demand, limiting the quantity OPEC can sell at a profitable price.
Correct answer: economic recession for oil importing nations- A. import substitution
- B. export promotion
- C. commercial dumping
- D. multilateral contract
Explanation: Hong Kong and South Korea followed export-promotion strategies, using manufactured exports and international markets to drive industrial…
Correct answer: export promotion- A. balance of trade deficits
- B. price inflation
- C. constrained economic growth
- D. improving terms of trade
Explanation: Higher oil prices increase import bills, worsen trade balances, and raise production and consumer prices, while also restricting growth in…
Correct answer: improving terms of trade- A. international trade per capita
- B. real income per capital
- C. unemployment per capita
- D. calories per capita
Explanation: Real income per capita adjusts national income for population size and inflation, making it a useful broad measure of average living…
Correct answer: real income per capital- A. sell 4 million pounds of tin
- B. sell 8 million pounds of tin
- C. buy 4 million pounds of tin
- D. buy 8 million pounds of tin
Explanation: A 4-million-pound rightward shift in demand would raise the price unless supply also increased by 4 million pounds at the target price.
Correct answer: sell 4 million pounds of tin- A. sell 4 million pounds of tin
- B. sell 8 million pounds of tin
- C. buy 4 million pounds of tin
- D. buy 8 million pounds of tin
Explanation: A 4-million-pound fall in demand would create excess supply and push the price below its target.
Correct answer: buy 4 million pounds of tin- A. is the first of the East Asian countries to be recognized for a successful outward-oriented development strategy
- B. has retained to the present time its strategy of import substitution as a source of economic growth
- C. has always accounted for a significant share of international trade, given its very large population
- D. has significantly increased its openness to international trade and foreign investment in recent decades
Explanation: China moved substantially away from its earlier inward-looking approach by expanding exports, accepting foreign investment and integrating…
Correct answer: has significantly increased its openness to international trade and foreign investment in recent decades1716. The OPEC oil cartel ?
- A. has shown that is easy to achieve cooperation among cartel members
- B. was successful in raising oil prices in the 1970s but was disbanded in the 1980s
- C. has shown greater success in realizing profits during periods of global recession
- D. has had a level of success in raising oil prices that other developing countries are unlikely to achieve with other primary commodities
Explanation: OPEC achieved notable price increases, especially in the 1970s, because oil supply was concentrated among a small group and demand was…
Correct answer: has had a level of success in raising oil prices that other developing countries are unlikely to achieve with other primary commodities- A. labor forces increase
- B. capital stocks increase
- C. new inventions increase productivity
- D. All of the above
Explanation: Growth can result from a larger labour force, increased capital stock, or higher productivity from inventions and improved technology.
Correct answer: All of the above- A. developing country export to advanced countries to receive preferential tariff treatment
- B. developing country imports from advanced countries to receive preferential tariff treatment
- C. any developing country to ignore the most-favored nation clause
- D. any advanced country to ignore the most favored-nation clause
Explanation: The GSP gives eligible developing countries reduced or preferential tariff access for their exports to advanced countries.
Correct answer: developing country export to advanced countries to receive preferential tariff treatment- A. relatively low import tariffs maintained by advanced countries
- B. highly elastic demand for these products in advanced countries
- C. declines in the supplies of these products on world markets
- D. sluggish demand for these products in advanced countries
Explanation: Raw materials and agricultural commodities often face sluggish or slowly growing demand in advanced economies, while productivity can…
Correct answer: sluggish demand for these products in advanced countries1720. Tariff levels in advanced countries tend to be __________ tariff levels in developing countries?
- A. higher than
- B. equal to
- C. lower than
- D. there is no general pattern
Explanation: Advanced countries generally maintain lower average tariff levels than developing countries, although they may use tariff escalation…
Correct answer: lower than