International Trade Related MCQs
1. Which of the following is international trade:
A. Trade between provinces B. Trade between regions
C. Trade between countries D. (b) and (c) of above
Answer: Option C
2. Theory of comparative advantage was presented by:
A. Adam Smith B. Ricardo
C. Hicks D. Arshad
Answer: Option B
3. Which is NOT an advantage of international trade:
A. Export of surplus production B. Import of defence material
C. Dependence on foreign countries D. Availability of cheap raw materials
Answer: Option C
4. If Japan and Pakistan start free trade, difference in wages in two countries will:
A. Increase B. Decrease
C. No effect D. Double
Answer B
5. Trade between two countries can be useful if cost ratios of goods are:
A. Equal B. Different
C. Undetermined D. Decreasing
Answer B
6. Modern theory of international trade is based n the views of:
A. Robbins and Ricardo B. Adam Smith and Marshall
C. Heckcsher and Ohlin D. Saleem and Kareem
Answer C
7. Foreign trade creates among countries:
A. Conflicts B. Cooperation
C. Hatred D. Both (a) & (b)
Answer B
8. Net exports equal:
A. Exports x Imports B. Exports + Imports
C. Exports - Imports D. Exports of services only
ANSWER C
9. A tariff:
A. Increases the volume of trade B. Reduces the volume of trade
C. Has no effect on volume of trade D. (a) and (c) of above
ANSWER B
10. A tariff is:
A. A restriction on the number of export firms B. Limit on the amount of imported goods
C. Tax and imports D. (b) and (c) of above
Answer:C
11.Dumping refers to:
A. Buying goods at low prices abroad and selling at higher prices locally B. Expensive goods selling for low prices
C. Reducing tariffs D. Sale of goods abroad at low a price, below their cost and price in home market
Ans D
12. According to Hecksher and Ohlin basic cause of international trade is:
A. Difference in factor endowments B. Difference in markets
C. Difference in political systems D. Difference in ideology
ANSWER A
13. All are advantages of foreign trade EXCEPT:
A. People get foreign exchange B. Nations compete
C. Cheaper goods D. Optimum utilisation of country's resources
ANSWER A
14. Two countries can gain from foreign trade if:
A. Cost ratios are different B. Tariff rates are different
C. Price ratios are different D. (a) and (c) of above
ANSWER D
15. International trade and domestic trade differ because of:
A. Trade restrictions B. Immobility of factors
C. Different government policies D. All of the above
ANSWER D
16. Terms of trade of developing countries are generally unfavourable because:
A. They export primary goods B. They import value added goods
C. They export few goods D. (a) and (b) of above
ANSWER D
17. Term of trade of a country show:
A. Ratio of goods exported and imported B. Ratio of import duties
C. Ratio of prices of exports and imports D. (a) and (c) of above
ANS C
18. In a free trade world in which no restrictions exist, international trade will lead to:
A. Reduced real living standard B. Decreased efficiency
C. Increased efficiency D. Reduced real GDP
ANSWER C
19. Govt. policy about exports and imports is called:
A. Monetary policy B. Fiscal policy
C. Commercial policy D. Finance policy
ANSWER C
20. What would encourage trade between two countries:
A. Different tax system B. Frontier checks
C. National currencies D. Reduced tariffs
ANS D
21."Terms of trade" between two countries refer to a ratio of:
A. Export prices to import prices B. Currency values
C. Exports to imports D. Balance of trade to balance of payments
#A
22. What would encourage trade between two countries?
A. Different tax system B. Quality control
C. Reduced tariffs D. Fixing import quotax
#C
23. It is drawback of protection:
A. Consumers have to pay higher prices B. Producerrs get higher profits
C. Quality of goods may be affected D. All of the above
#D
24. It is drawback of free trade:
A. Prices of local goods rise B. Government looses income from custom duties
C. National resources are underutilized D. (a) and (b) of above
#B
25. Gold standard means:
A. Currency of the country is made of gold B. Paper currency is not used
C. Currency of the country is freely convertible into gold D. (a) and (c) of above
#D
26. Terms of trade of a country:
A. Mean the trade agreement between trading countries B. Is another name of exchange ratio of two currencies
C. Show the ratio between total export earnings and import bill of a country D. Are determined by the price index of export and import goods
#D
27. Pakistan's terms of trade:
A. Have risen over past few years B. Have fallen over past few years
C. Always remain above 100 D. Are determined by federal govt.
#B
28. Exchange value of Pak rupee against other currencies has fallen because:
A. Our total exports are smaller B. Our imports are more than exports
C. Exports are more than imports D. Pakistan does not produce gold
#B
29. This is an advantage of foreign trade:
A. We can preserve our natural resources B. New technology comes to the country
C. People need not go abroad D. We can get foreign currencies
#B
30. This is NOT an advantage of foreign trade:
A. We can get gold from abroad B. New technology comes to the country
C. We can import goods which are in short supply in Pakistan D. We can made best use of natural resources
#A
31.Foreign trade:
A. Increases employment opportunities B. Increases international mobility of labour
C. Increases competition D. All of the above
#D
32. Foreign trade:
A. Benefits developed countries B. Benefits underdeveloped countries
C. Benefits democratic countries D. Benefits all countries
#D
33. Foreign trade has the advantage:
A. Trading countries get foreign exchange B. Can import scarce raw materials
C. Can import machinery and technology D. (b) and (c) of above
#D
34. In foreign trade, Protection policy means:
A. Restrictions on exports B. Restriction on transfer of foreign exchange
C. Restrictions on imports D. All of the above
#C
35. If a country decreases the external value of its currency, it will affect:
A. Volume of exports B. Volume of imports
C. General price level D. All of the above
#D
36. The theory explaining trade between two countries is called:
A. Comparative advantage B. Comparative bargain
C. Comparative trade D. Comparative returns
#A
37. The theory explaining trade between two countries is called:
A. Comparative disadvantage theory B. Comparative cost theory
C. Comparative trade theory D. None of the above
#B
38. Trade between two countries takes place when:
A. Cost ratios of commodities are equal B. Cost ratios of commodities are different
C. Cost ratios of commodities are high D. Cost ratios of commodities are low
#B
39. David Ricardo presented the theory of international trade called:
A. Theory of absolute advantage B. Theory of comparative advantage
C. Theory of equal advantage D. Theory of total advantage
#B
40. Rich countries have deficit in their balance of payments:
A. Sometimes B. Never
C. Alternate years D. Always
#A
A. Trade between provinces B. Trade between regions
C. Trade between countries D. (b) and (c) of above
Answer: Option C
2. Theory of comparative advantage was presented by:
A. Adam Smith B. Ricardo
C. Hicks D. Arshad
Answer: Option B
3. Which is NOT an advantage of international trade:
A. Export of surplus production B. Import of defence material
C. Dependence on foreign countries D. Availability of cheap raw materials
Answer: Option C
4. If Japan and Pakistan start free trade, difference in wages in two countries will:
A. Increase B. Decrease
C. No effect D. Double
Answer B
5. Trade between two countries can be useful if cost ratios of goods are:
A. Equal B. Different
C. Undetermined D. Decreasing
Answer B
6. Modern theory of international trade is based n the views of:
A. Robbins and Ricardo B. Adam Smith and Marshall
C. Heckcsher and Ohlin D. Saleem and Kareem
Answer C
7. Foreign trade creates among countries:
A. Conflicts B. Cooperation
C. Hatred D. Both (a) & (b)
Answer B
8. Net exports equal:
A. Exports x Imports B. Exports + Imports
C. Exports - Imports D. Exports of services only
ANSWER C
9. A tariff:
A. Increases the volume of trade B. Reduces the volume of trade
C. Has no effect on volume of trade D. (a) and (c) of above
ANSWER B
10. A tariff is:
A. A restriction on the number of export firms B. Limit on the amount of imported goods
C. Tax and imports D. (b) and (c) of above
Answer:C
11.Dumping refers to:
A. Buying goods at low prices abroad and selling at higher prices locally B. Expensive goods selling for low prices
C. Reducing tariffs D. Sale of goods abroad at low a price, below their cost and price in home market
Ans D
12. According to Hecksher and Ohlin basic cause of international trade is:
A. Difference in factor endowments B. Difference in markets
C. Difference in political systems D. Difference in ideology
ANSWER A
13. All are advantages of foreign trade EXCEPT:
A. People get foreign exchange B. Nations compete
C. Cheaper goods D. Optimum utilisation of country's resources
ANSWER A
14. Two countries can gain from foreign trade if:
A. Cost ratios are different B. Tariff rates are different
C. Price ratios are different D. (a) and (c) of above
ANSWER D
15. International trade and domestic trade differ because of:
A. Trade restrictions B. Immobility of factors
C. Different government policies D. All of the above
ANSWER D
16. Terms of trade of developing countries are generally unfavourable because:
A. They export primary goods B. They import value added goods
C. They export few goods D. (a) and (b) of above
ANSWER D
17. Term of trade of a country show:
A. Ratio of goods exported and imported B. Ratio of import duties
C. Ratio of prices of exports and imports D. (a) and (c) of above
ANS C
18. In a free trade world in which no restrictions exist, international trade will lead to:
A. Reduced real living standard B. Decreased efficiency
C. Increased efficiency D. Reduced real GDP
ANSWER C
19. Govt. policy about exports and imports is called:
A. Monetary policy B. Fiscal policy
C. Commercial policy D. Finance policy
ANSWER C
20. What would encourage trade between two countries:
A. Different tax system B. Frontier checks
C. National currencies D. Reduced tariffs
ANS D
21."Terms of trade" between two countries refer to a ratio of:
A. Export prices to import prices B. Currency values
C. Exports to imports D. Balance of trade to balance of payments
#A
22. What would encourage trade between two countries?
A. Different tax system B. Quality control
C. Reduced tariffs D. Fixing import quotax
#C
23. It is drawback of protection:
A. Consumers have to pay higher prices B. Producerrs get higher profits
C. Quality of goods may be affected D. All of the above
#D
24. It is drawback of free trade:
A. Prices of local goods rise B. Government looses income from custom duties
C. National resources are underutilized D. (a) and (b) of above
#B
25. Gold standard means:
A. Currency of the country is made of gold B. Paper currency is not used
C. Currency of the country is freely convertible into gold D. (a) and (c) of above
#D
26. Terms of trade of a country:
A. Mean the trade agreement between trading countries B. Is another name of exchange ratio of two currencies
C. Show the ratio between total export earnings and import bill of a country D. Are determined by the price index of export and import goods
#D
27. Pakistan's terms of trade:
A. Have risen over past few years B. Have fallen over past few years
C. Always remain above 100 D. Are determined by federal govt.
#B
28. Exchange value of Pak rupee against other currencies has fallen because:
A. Our total exports are smaller B. Our imports are more than exports
C. Exports are more than imports D. Pakistan does not produce gold
#B
29. This is an advantage of foreign trade:
A. We can preserve our natural resources B. New technology comes to the country
C. People need not go abroad D. We can get foreign currencies
#B
30. This is NOT an advantage of foreign trade:
A. We can get gold from abroad B. New technology comes to the country
C. We can import goods which are in short supply in Pakistan D. We can made best use of natural resources
#A
31.Foreign trade:
A. Increases employment opportunities B. Increases international mobility of labour
C. Increases competition D. All of the above
#D
32. Foreign trade:
A. Benefits developed countries B. Benefits underdeveloped countries
C. Benefits democratic countries D. Benefits all countries
#D
33. Foreign trade has the advantage:
A. Trading countries get foreign exchange B. Can import scarce raw materials
C. Can import machinery and technology D. (b) and (c) of above
#D
34. In foreign trade, Protection policy means:
A. Restrictions on exports B. Restriction on transfer of foreign exchange
C. Restrictions on imports D. All of the above
#C
35. If a country decreases the external value of its currency, it will affect:
A. Volume of exports B. Volume of imports
C. General price level D. All of the above
#D
36. The theory explaining trade between two countries is called:
A. Comparative advantage B. Comparative bargain
C. Comparative trade D. Comparative returns
#A
37. The theory explaining trade between two countries is called:
A. Comparative disadvantage theory B. Comparative cost theory
C. Comparative trade theory D. None of the above
#B
38. Trade between two countries takes place when:
A. Cost ratios of commodities are equal B. Cost ratios of commodities are different
C. Cost ratios of commodities are high D. Cost ratios of commodities are low
#B
39. David Ricardo presented the theory of international trade called:
A. Theory of absolute advantage B. Theory of comparative advantage
C. Theory of equal advantage D. Theory of total advantage
#B
40. Rich countries have deficit in their balance of payments:
A. Sometimes B. Never
C. Alternate years D. Always
#A
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