Free International Political Economy MCQs with Answers

• A. interdependence
• B. state-sponsored sanctions
• C. self-reliance
• D. import reliant

Explanation: Autarky means seeking economic self-sufficiency and relying as little as possible on external trade.

• A. revaluation
• B. reduction
• C. restructuring
• D. devaluation

Explanation: Devaluation is an official reduction in a currency's value under a fixed or managed exchange-rate system.

• A. hard currency reserves
• B. homes
• C. factories
• D. None of these answers is correctTry Prep Courses

Explanation: Standing wealth refers to relatively fixed physical assets such as homes and factories, whereas hard-currency reserves are liquid…

• A. a tariff
• B. a surcharge
• C. a subsidy
• D. a severance taxCompare Local Schools

Explanation: A tariff is a tax charged on imported goods, usually to raise revenue or protect domestic producers.

• A. China
• B. the United States
• C. Singapore
• D. France

Explanation: China's historical attempts at economic self-sufficiency and restricted external trade illustrate how autarky can limit efficiency, access…

• A. global trade agreements
• B. reciprocity
• C. regional trade agreements
• D. interdependence

Explanation: Besides bilateral agreements, regional trade agreements such as the European Union and USMCA regulate trade among groups of countries.

• A. increases the total portfolio value of foreigners who hold that currency
• B. causes a drop in demand for that currency
• C. increases confidence in a state's ability to meet its debts
• D. is rarely a quick fix for financial problems in the short term

Explanation: Devaluation lowers a currency's external value and can reduce confidence in it, often causing demand for the currency to fall.

• A. the WTO will likely be replaced by the International Monetary Fund
• B. the more necessary the WTO will be
• C. a world-wide common market will soon be achieved
• D. the WTO may be weakened

Explanation: Stronger regional trading blocs can divert trade away from the multilateral WTO system and reduce its central importance.

• A. stimulus spending to increase inflation
• B. deficit reduction to increase economic growth
• C. deficit spending to stimulate the economy
• D. fiscal restraint to bring down inflation

Explanation: Keynesian economics supports government deficit spending during weak economic conditions to raise aggregate demand, employment and output.

• A. It is linked in value to a basket of several key international currencies
• B. It can be owned by states or companies, but not by individuals
• C. It is the closest thing to a world currency that exists
• D. It is created in limited amounts by the IMF

Explanation: SDRs are IMF-created reserve assets allocated to member states and held by prescribed official institutions, not by private companies or…

• A. They can't use state funds to buy or sell currencies
• B. All of their movements are tightly regulated by the IMF
• C. Developing countries oppose the manipulation of markets by developed countries
• D. The control only a small fraction of the money moving on such markets

Explanation: Governments and central banks control only a small share of the enormous volume traded daily in global currency markets, so intervention…

• A. "exported" currency to other countries
• B. greatly increased tariffs on imports from Asia
• C. increased export of goods and services by offering subsidies to those industries
• D. invested heavily in the euro and the yen

Explanation: The United States has often financed its trade deficit by sending dollars abroad in payment for imports, with those dollars then invested…

• A. Movement across borders of countries of goods, people, money, investments etc.
• B. Globalization
• C. International trade
• D. None of the above

Explanation: Cross-border transactions involve the movement of goods, people, money, investment or other resources between countries.

• A. A stock or share
• B. A bond denominated in a currency that is alien to a substantial proportion of the underwrites through whom it is distributed and sold
• C. A share issued simultaneously in different stock markets
• D. A financial contract that derives its value from an underlying asset

Explanation: European equity, or euro-equity, refers to shares issued simultaneously in more than one national stock market.

• A. Through capital controls
• B. Through import tariffs
• C. Through immigration controls
• D. All of the above

Explanation: Protectionism can restrict cross-border economic activity through import tariffs, controls on capital movements, and restrictions on…

• A. Companies export material throughout the global
• B. Companies find materials, components and services from anywhere in the world
• C. Companies pool resources to find new sources
• D. None of the above

Explanation: Global sourcing means obtaining materials, components, and services from suppliers located anywhere in the world.

• A. A bond denominated in a currency alien to underwrites
• B. A loan provided in special Euromarkets.
• C. The supraterritorial denomination issued throughout the IMF (used as its unit of account)
• D. Site for financial business offering tax reductions and subsidies

Explanation: A Special Drawing Right is an IMF-created international reserve asset whose value is based on a basket of major currencies and which…

• A. i, ii, iii
• B. ii, iii, i
• C. iii, i, ii
• D. iii, ii, i

Explanation: McDonald’s began before the other two developments, electronic stock exchanges emerged later, and the WTO was established in 1995.

• A. North America
• B. Western Europe
• C. the Middle East
• D. Japan

Explanation: The global North generally includes wealthy industrial regions such as North America, Western Europe and Japan.

• A. MNCs
• B. NGOs
• C. IGOs
• D. substate actors

Explanation: A banana republic traditionally describes a politically weak, poorer country whose economy and government are heavily influenced by…