1. _______________states that international trade will bring about equalization in the returns to homogeneous factors across countries, even without their physical
movement.
Correct : B. stolper-samuelson theorem,
2. ____________states that at constant commodity prices, an increase in the quantity of one factor increases the production of the commodity intensive in this factor and
reduces the output of the other commodity which is intensive in the constant factor.
Correct : C. rybczynski theorem, and
3. Net barter Terms of Trade is defined as
Correct : A. px/pm
4. The foreign exchange rate is NOT
Correct : B. rate at which of one commodity expresses in terms of another.
5. ______________means the measures adopted for avoiding risks.
Correct : A. hedging
6. _________________ is an open position in the market with an expectation of gains
through the fluctuations.
Correct : B. speculation
7. Under a fixed exchange rate system, ____________________are official changes in
the value of a country's currency relative to other currencies.
Correct : A. devaluation
8. __________ is the deliberate downward adjustment in the official exchange rate,
reduces the currency's value.
Correct : A. devaluation
9. A key effect of devaluation is that it
Correct : A. makes the domestic currency cheaper relative to other currencies.
10. Devaluation leads to
Correct : D. all the above
11. Recardo’s Law of Comparitive advantage is based on
Correct : A. labour theory of value
12. The exchange rate system that is followed in India is
Correct : C. managed float system
13. Pure theory of international trade is termed so because
Correct : C. monetary approaches are absent in them
14. Which among the following is true with regard to the PPP theory?
Correct : D. all the above
15. law of one price prevails when
Correct : D. all the above
16. ______________ is a summary statement of all economic transactions of the residents of a nation with the residents of Rest of the World (ROW) during a
particular period of time.
Correct : D. net exports
17. Which among the following are differences between Balance of Trade and
Balance of Payment?
Correct : D. all the above
18. If Debit balance in the balance of payment accounts are greater than the Credit
balance it leads to
Correct : B. balance of payment deficit
19. When each international transaction undertaken by the residents of a country are
entered as a debit and credit entry of equal size, into the balance of payments, the method is known as.
Correct : C. double entry bookkeeping
20. Which among the following best explains the difference between Trade in
Invisibles and merchandise trade?
Correct : D. all the above.
21. _______________are receipts which the residents of a country receive for free,
without making any present or future service transaction in return.
Correct : C. unilateral transfers
22. The _______________ records all international financial transactions that involve resident of the country concerned- changing either his assets with or his liabilities
to a resident of another country.
Correct : B. capital account
23. Official reserves consist of
Correct : D. all the above
24. Distinguish between autonomous and accommodating items in the balance of payments.
Correct : D. all the above
25. Which among the following sentence is NOT true
Correct : C. a surplus in a nation’s balance of payments is given by a net debit balance in the nation’s autonomous items and a deficit is given by a net credit balance.
26. Which among the following is NOT a measure to correct the balance of payment
disequilibrium?
Correct : D. non of the above
27. Tariffs are
Correct : A. taxes imposed on imports.
28. When tariffs are imposed
Correct : A. the prices of imports would increase to the extent of tariff.
29. What are the major drawbacks of tariffs
Correct : D. all the above
30. Which of the following statement is true
Correct : A. a depreciation is likely to correct a deficit in bop when the demand for and supply of foreign exchange is more elastic
31. Protectionist trade policy is associated with
Correct : A. mercantilists
32. Modern trade theory is developed by
Correct : B. heckscher and ohlin
33. According to ________ even though a country is absolutely disadvantageous in
both commodities there is still possibility for trade
Correct : C. david recardo
34. Principles of Political Economy and Taxation is the book of
Correct : C. david recardo
35. Who reoriented comparative advantage theory?
Correct : C. haberler
36. Haberler reconstituted comparative advantage theory on the basis of ____
Correct : A. opportunity cost theory
37. Factor endowment theory is also known as
Correct : A. heckcher ohlin theory
38. The accounting system used in BOP
Correct : A. double entry book keeping system
39. PPP theory is associated with the determination of _______
Correct : A. exchange rate
40. The analysis method used in Leontief’s study
Correct : C. input – output analysis
41. India is NOT a _____ abundant nation
Correct : B. capital
42. According to HO Model, India should import ______ abundant goods
Correct : A. labour
43. When a commodity is produced with low K/L ratio that commodity is ______
intensive commodity
Correct : B. capital
44. A situation where one commodity is capital intensive in one country and labour
intensive in another country is called
Correct : D. faction intensity reversal
45. According to Rybczyski theorem commodity price should be