Question 1

Who propounded the opportunity cost Theory of international trade?&#10;A)Ricardo&#10;B)Marshall&#10;C)Heckscher & Ohlin&#10;D)Haberler

Accepted Answer

Gottfried Haberler is credited with propounding the opportunity cost theory of international trade, which is an alternative approach to the classical theory of comparative advantage. This theory emphasizes the choices and trade-offs involved in production and trade decisions.

Question 2

'Infant industry argument' in international trade is given in support of:&#10;A)Granting Protection&#10;B)Free trade&#10;C)Curbing export&#10;D)None of the above

Accepted Answer

The 'Infant Industry Argument' is used to justify granting protection to new or emerging domestic industries that are not yet strong enough to compete against established foreign competitors. This protection often comes in the form of tariffs, quotas, or subsidies.

Question 3

The Heckscher-Ohlin approach to international trade provides important insights, in&#10;A)Gains from trade&#10;B)Effect of trade on production and consumption&#10;C)Effect of trade on the incomes of production factors&#10;D)All of the above

Accepted Answer

The Heckscher-Ohlin model explains how countries gain from trade, how trade affects production and consumption patterns, and how it impacts the incomes of different factors of production based on their relative abundance.

Question 4

Which of the following is a determinant of trade?&#10;A)Tastes&#10;B)Per capita income&#10;C)Technological change&#10;D)All of the above

Accepted Answer

All of the choices listed are determinants of trade. Tastes influence demand for foreign goods, per capita income affects the ability to purchase goods, and technological change can alter production efficiencies and product availability, impacting trade patterns.

Question 5

Which of the following is not a benefit of international trade?&#10;A)High wage levels for all domestic workers&#10;B)Lower domestic prices&#10;C)Development of more efficient methods and new products.&#10;D)A greater range of consumption choices.

Accepted Answer

International trade does not guarantee high wage levels for all domestic workers. While it can lead to overall economic growth and may increase wages in certain sectors, it can also result in wage stagnation or decline in industries that face competition from imports.

Question 6

What determines the pattern of specialisation and trade in industries with external economies of scale?&#10;A)Product differentiation&#10;B)Monopolistic competition&#10;C)Historical competition&#10;D)None of the above

Accepted Answer

Historical competition determines the pattern of specialization and trade in industries with external economies of scale, as initial advantages can lead to long-term dominance due to path dependence and agglomeration effects.

Question 7

The exchange of goods and services are known as&#10;A)International Trade&#10;B)Trade&#10;C)None of these&#10;D)Domestic Trade

Accepted Answer

Trade is the general term used to describe the exchange of goods and services. It can occur within a country (domestic trade) or between countries (international trade).

Question 8

Which is not an advantage of international trade:&#10;A)Export of surplus production&#10;B)Import of defence material&#10;C)Dependence on foreign countries&#10;D)Availability of cheap raw material

Accepted Answer

Dependence on foreign countries is not an advantage of international trade; it can be a disadvantage as it may lead to vulnerability and lack of self-sufficiency.

Question 9

The first classical theory of International Trade is given by&#10;A)Friedman&#10;B)Keynes&#10;C)Adam Smith&#10;D)Heckscher-Ohlin

Accepted Answer

Adam Smith is credited with the first classical theory of international trade, known as the theory of absolute advantage, which he introduced in his 1776 work "The Wealth of Nations."

Question 10

In classical theory of International Trade, the exchange of goods and services takes on the basis of &#8230;&#8230;&#8230;&#8230;.. system?&#10;A)Barter&#10;B)Money&#10;C)Labour&#10;D)Capital

Accepted Answer

In classical theory of International Trade, trade between countries was primarily conceptualized as being based on a barter system, where goods and services are directly exchanged for other goods and services without the use of money as a medium.

Question 11

In Heckscher Ohlin theory, what is assumed to be same across the countries?&#10;A)Capital&#10;B)Labour&#10;C)Transportation cost&#10;D)Technology

Accepted Answer

The answer of In Heckscher Ohlin theory, what is assumed...

Deck 8: International Trade Theory and Practice