International Economics Additional Practice Test

12th Standard Economics — International Economics: Additional Online Practice Test

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Which branch of economics is primarily concerned with the economic interdependence among nations and the entire range of cross-border transactions?

A.Development Economics B.International Economics C.Fiscal Economics D.Monetary Economics

The subject matter of International Economics is divided into several segments. Under which segment are issues of tariffs, protection, and exchange control analyzed?

A.Pure Theory of Trade B.Policy Issues C.International Cartels D.Trade Blocs

According to the comparative differences between domestic and foreign trade, which of the following is a characteristic of internal trade?

A.High immobility of labor and capital B.High restriction of goods through quotas and tariffs C.Multiple currencies in circulation D.Free movement of factors of production across regions

Adam Smith's theory of absolute cost advantage operates under several simplified assumptions. Which of the following is one of these assumptions?

A.High transportation costs between nations B.Multiple factors of production including capital C.Labor is the only factor of production D.Heterogeneous labor units

According to David Ricardo's theory of comparative cost advantage, a country should specialize in and export the commodity in which its:

A.Absolute cost of production is the highest B.Comparative cost disadvantage is the least C.Nominal exchange rate is at purchasing power parity D.Factor intensity matches its capital abundance

The modern theory of international trade, developed by Eli Heckscher and Bertil Ohlin, attributes the primary cause of comparative cost differences to differences in:

A.Labor productivity and efficiency of workers B.National income levels and purchasing power C.Factor endowments and factor intensities D.Transportation networks and shipping speeds

The concept of Net Barter Terms of Trade, which measures the ratio of the export price index to the import price index, was developed by which economist in 1927?

A.Jacob Viner B.G.S. Dorrance C.David Ricardo D.Frank Taussig

Which concept of terms of trade adjusts the commodity terms of trade for changes in the productivity of a country's export industries?

A.Gross Barter Terms of Trade B.Income Terms of Trade C.Single Factoral Terms of Trade D.Double Factoral Terms of Trade

The Balance of Trade differs from the Balance of Payments because the Balance of Trade:

A.Records transactions of both visible and invisible items B.Includes capital transfers and foreign direct investments C.Considers only the export and import of physical commodities D.Is always kept in perfect equilibrium by central banks

Q10

Which type of Balance of Payments disequilibrium is caused by deep-seated, long-run structural shifts in an economy as it progresses from one stage of economic growth to another?

A.Cyclical disequilibrium B.Secular disequilibrium C.Temporal disequilibrium D.Frictional disequilibrium

Q11

Devaluation is a deliberate policy tool used to correct Balance of Payments deficits. In which of the following years was the Indian Rupee devalued?

A.1956 B.1966 C.1980 D.2016

Q12

Which economist defined the equilibrium exchange rate as that rate which, over a certain period of time, keeps the balance of payments in equilibrium?

A.Ragnar Nurkse B.Adam Smith C.Jacob Viner D.Irving Fisher

Q13

If the bilateral nominal exchange rate is 'e', the domestic price level is 'P', and the foreign price level is 'Pf', how is the Real Exchange Rate calculated?

A.e multiplied by P divided by Pf B.e multiplied by Pf divided by P C.e divided by the sum of P and Pf D.the sum of e and P divided by Pf

Q14

Which of the following is a primary characteristic of Foreign Portfolio Investment (FPI) that distinguishes it from Foreign Direct Investment (FDI)?

A.It involves long-term ownership of physical factories B.It is motivated primarily by short-term profit and does not seek management control C.It requires complete technology transfer to the host country D.It is strictly prohibited in the financial and banking sectors

Q15

Under India's current foreign direct investment policies, in which of the following sectors is FDI completely prohibited?

A.Pharmaceuticals B.Telecommunications C.Atomic energy D.Hospitality and tourism

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About this International Economics test

This free online practice test covers International Economics from the 12th Standard Economics (Samacheer Kalvi) syllabus. Choose the number of questions and an optional time limit, then answer and submit — everything is checked in your browser, with the correct answers and a worked explanation shown at the end. For the full solutions to every question in this set, see the solved MCQs page.

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