Q41: In which of the following types of regional economic integration are internal tariffs eliminated with member countries levying a common external tariff on goods being imported from nonmembers.
- A. customs union
- B. free trade area
- C. common market
- D. complete economic integration
Answer
Answer A. customs union
Q42: A___focuses on eliminating internal tariffs with member countries levying a common
external tariff on goods being imported from nonmembers. Additionally, this type of regional economic integration allows free mobility of production factors such as labor and capital.
A. free trade area
B. common market
C. customs union
D. complete economic integration
Answer
Answer B. common market
Q43: ___occurs when production shifts to more efficient producers for reasons of comparative advantage, allowing consumers access to more goods at a lower price than would have been possible without integration.
- A. trade diversion
- B. divestment
- C. trade creation
- D. retrenchment
Answer
Answer C. trade creation
Q44: Which of the following was developed with the rationale that the U.S.-Canadian trade was the Largest bilateral trade in the world and that the United States is Mexico’s and Canada’s largest trading partner?
- A. cefta (the central european free trade agreement)
- B. nafta (the north american free trade agreement)
- C. asean (association of south east asian nations)
- D. eu (the european union)
Answer
Answer B. nafta (the north american free trade agreement)
Q45: ___occurs when trade shifts to countries in the group at the expense of trade with countries not in the group, even though the nonmember country might be more efficient in the absence of trade barriers.
- A. trade creation
- B. divestment
- C. retrenchment
- D. trade diversion
Answer
Answer D. trade diversion
Q46: NAFTA calls for all of the following EXCEPT:
- A. the harmonization of trade rules
- B. the liberalization of restrictions on services
- C. the implementation of a common currency
- D. the liberalization of restrictions on foreign investment
Answer
Answer C. the implementation of a common currency
Q47: NAFTA is a good example of:
- A. trade erosion
- B. divestment
- C. retrenchment
- D. trade diversion
Answer
Answer D. trade diversion.
Q48: Where is the headquarters of the EU?
- A. belgium
- B. netherlands
- C. luxembourg
- D. greece
Answer
Answer A. belgium
Q49: Apart from India, Pakistan and Bangladesh who are the other member countries of SAARC?
- A. nepal, bhutan, thailand and singapore
- B. nepal, bhutan, malaysia and maldives
- C. nepal, bhutan, maldives, sri lanka and afghanistan
- D. none of the above
Answer
Answer C. nepal, bhutan, maldives, sri lanka and afghanistan
Q50: Which of the following is not the main purpose for formation of SAARC
- A. to combat terrorism
- B. to promote the welfare of the people of south asia
- C. to form mutual defense against foreign aggression
- D. none of the above
Answer
Answer C. to form mutual defense against foreign aggression
Q51: SAPTA is a trade agreement by___
- A. asean nations
- B. apec nations
- C. saarc nations
- D. eu nations
Answer
Answer C. saarc nations
Q52: What is the full form of ASEAN?
- A. association of south east asian nations
- B. administration of south east asian nations
- C. administration of southern eastern asian nations
- D. organisation of south east asian nations
Answer
Answer A. association of south east asian nations
Q53: The European Union is a free trade association that is based on a(n)
- A. economic and monetary union
- B. economic union
- C. monetary union
- D. a commonly agreed upon list of lowered tariffs
Answer
Answer A. economic and monetary union.
Q54: Which one of the following has a single currency managed by a common central bank?
- A. asean
- B. european union
- C. world trade organization
- D. the organization for economic cooperation and development
Answer
Answer B. european union
Q55: Which of the following is an advantage of turnkey projects?
- A. can earn a return on knowledge asset
- B. will not create a competitor
- C. tight control of operations
- D. all the above
Answer
Answer A. can earn a return on knowledge asset
Q56: The country that attracts the largest FDI inflow is
- A. india
- B. china
- C. usa
- D. brazil
Answer
Answer B. china
Q57: Firm that operates internationally is able to
- A. earn a greater return from their skills and core competencies
- B. realize location economies where they can be performed most efficiently
- C. realize greater experience curve economies, which reduces the cost of production
- D. all the above
Answer
Answer D. all the above
Q58: Which one of the following is renowned for its high-quality databases on economic and social data?
- A. wto
- B. eu
- C. oecd
- D. world bank
Answer
Answer C. oecd
Q59: Which of the following is not seen as an advantage of the gold standard?
- A. For a given stock of gold, a rise in real money supply can only occur if the price level declines
- B. Inflation is unlikely to emerge as a significant problem
- C. No country needs to serve at the centre of this fixed exchange rate system
- D. The monetary mechanism has credibility
Answer
Answer A. For a given stock of gold, a rise in real money supply can only occur if the price level declines
Q60: The Bretton Woods System is referred to as the “gold exchange standard” because..
- A. it replaced sterling which had been the silver exchange standard
- B. gold was the fundamental standard of value based on the ability of the US to maintain the parity of $35 per ounce
- C. all central banks exchanged their foreign exchange reserves for gold to become members of the system
- D. gold could be exchanged between countries, all other capital was controlled
Answer
Answer B. gold was the fundamental standard of value based on the ability of the US to maintain the parity of $35 per ounce
Q61: The following three aspects of a monetary system are jointly incompatible: monetary policy independence; (A)___exchange rates; and (B)___
- A. (A) floating; (B) capital controls
- B. (A) floating; (B) free capital mobility
- C. (A) fixed; (B) capital controls
- D. (A) fixed; (B) free capital mobility
Answer
Answer D. (A) fixed; (B) free capital mobility
Q62: Which of the following would likely have the least direct influence on a country’s current account?
- A. Inflation
- B. National Income
- C. Exchange Rates
- D. Tariffs
- E. A tax on income earned from foreign stocks
Answer
Answer E. A tax on income earned from foreign stocks
Q63: If your local currency is in variable form and foreign currency is in fixed form quotation will be
- A. Indirect
- B. Direct
- C. Local form
- D. Foreign form
Answer
Answer B. Direct
Q64: ___More instability in currency called as___
- A. Country Risk
- B. finance Risk
- C. Currency Risk
- D. liquidity Risk
Answer
Answer C. Currency Risk
Q65: By definition, currency depreciation occurs when the value of
- A. One currency falls relative to another currency
- B. One currency rises relative to another currency
- C. C) all currencies fall relative to gold
- D. D) gold falls relative to the value of currencies
Answer
Answer A. One currency falls relative to another currency
Q66: What is the main role of the IMF?
- A. To ensure a stable exchange rate regime and provide emergency assistance to countries facing crises in balance of payments
- B. To be a forum for trade and liberalization
- C. To assist countries in development
- D. To facilitate private investment around the world
Answer
Answer A. To ensure a stable exchange rate regime and provide emergency assistance to countries facing crises in balance of payments
Q67: Which of the following statement is correct?
- A. Every member country of the IMF automatically becomes the member of the World Bank
- B. The World Bank has 45 founder members
- C. India is not the founding member of the World Bank
- D. risk process involved
Answer
Answer A. Every member country of the IMF automatically becomes the member of the World Bank
Q68: Which of the following is not the function of the World Bank?
- A. To provide long term loan to the member countries
- B. To provide loan to private investors belonging to member countries on its own guarantee
- C. To ensure exchange rate stability
- D. To provides loan mainly for productive activities
Answer
Answer C. To ensure exchange rate stability
Q69: Foreign bonds issued in Japan are known as
- A. Bulldog bonds
- B. B. dragon bonds
- C. C. Yankee bonds
- D. D. samurai bonds
Answer
Answer D. D. samurai bonds
Q70: Eurobonds are admired because
- A. Supplier
- B. Retailer
- C. Competition
- D. Government bureau
Answer
Answer B. Retailer
Q71: Simplicity with which bondholders and shareholders can change their investments into cash is known___countries
- A. They are less risky than traditional bonds
- B. European companies are considered very stable
- C. Of absence of government regulation
- D. They are always denominated in euro
Answer
Answer C. Of absence of government regulation
Q72: Which of the following is not a purportedly beneficial outcome of the globalization process?
- A. The redistribution of wealth, addressing disparities in economic and resource allocation across the globe through a sense of greater ‘interconnectedness’
- B. The growing sense of global community, resulting in super-national identities that result from populations feeling closer to one another
- C. The sharing of ideas, technologies and resources that can directly benefit human security, such as medical advancements
- D. A global market that has demonstrated the ability, if left unchecked, to reduce poverty and make substantial economic gains
Answer
Answer A. The redistribution of wealth, addressing disparities in economic and resource allocation across the globe through a sense of greater ‘interconnectedness’
Q73: How might global inequality present a threat to global security?
- A. Human security is threatened by global inequality, because 3s of the world population do not share the benefits of globalisation. However, this inequality does not translate into political instability or involve military action
- B. Global inequality creates disenfranchised populations who, although discontent with their situation, lack the agency to rebel or protest
- C. Revolutionary uprisings are likely to occur; people of the world who have been left behind by neoliberal globalisation can become radicalised and rebel against those who have benefitted from the economic policies that have failed them
- D. Global inequality does not present a significant threat to global security
Answer
Answer C. Revolutionary uprisings are likely to occur; people of the world who have been left behind by neoliberal globalisation can become radicalised and rebel against those who have benefitted from the economic policies that have failed them
Q74: Which of the following is an impact of common structural adjustment policies on the poor?
- A. Cost of imports soar, including vital resources such as imported medicines. Basic food prices rise, putting even greater pressure on already stretched household budgets
- B. Reduced health, education, and social welfare spending and the introduction of cost-recovery and user-fees put healthcare and education beyond the reach of many ordinary people. Public sector redundancies and salary freezes lead to fewer teachers and doctors
- C. Massive redundancies and increased unemployment with no social security provision push families deeper into poverty. Farmers and small companies can no longer afford to borrow money and are forced to reduce production or go out of business
- D. All of the above
Answer
Answer D. All of the above
Q75: Which of the following best describes the existing legacy of structural adjustment policies?
- A. Structural adjustment policies have been largely successful in achieving their aims of macroeconomic security in the developing world
- B. The neoliberal principles on which structural adjustment policies have been based have proven well suited to promoting human welfare in developing countries
- C. Neoliberal based adjustment policies have caused great and unnecessary hardship in developing countries and there is still no evidence they achieved their objectives for macroeconomic stability and growth
- D. There is significant evidence that structural adjustment policies have promoted economic growth and macroeconomic stability in the countries in which they were applied
Answer
Answer C. Neoliberal based adjustment policies have caused great and unnecessary hardship in developing countries and there is still no evidence they achieved their objectives for macroeconomic stability and growth
Q76: Which of the following are economic objectives of IMF adjustment policies?
- A. Devaluation to promote exports and reduce demand for imports by raising their prices
- B. Tighter monetary and credit policies with higher interest rates to reduce overall demand, and thus demand for imports; to limit or reduce the rate of inflation
- C. All of the above
- D. Public spending cuts to reduce the budget deficit and slow the growth of government debt
Answer
Answer C. All of the above
Q77: What, according to Classical economic theory, was the purpose of Mercantilism in the 18th century?
- A. Mercantilism was a means by which to strengthen the sovereign state, and inherently linked to international conflict
- B. Mercantilism was a means by which to promote societal security for the populations of states
- C. Mercantilism was a route to increasing imports and transnational trade
- D. Mercantilism was not a significant economic theory until after the 18th century
Answer
Answer A. Mercantilism was a means by which to strengthen the sovereign state, and inherently linked to international conflict
Q78: How have the World Bank and International Monetary Fund, as international financial institutions (IFIs), affected the development of poorer countries?
- A. Financial policies advocated by the World Bank and IMF were readily adopted by developing countries that sought to bring their economic development into line with wealthier nations. The IFIs focus has been on achieving human security and the promotion of development at a societal level
- B. Through the implementation of specific financial policies adopted at the bequest of global financial institutions, many developing countries have gained economic prosperity and the correlating levels of human security
- C. The World Bank and IMF tend to operate in an economic arena that includes only major financial institutions and wealthy states; coupled with a respect for sovereignty, the scope of such institutions does not reach to interference in national politics
- D. IFIs identified the economic failings of developing countries as being the result of political problems. Thus, IFIs adopted an approach that involved political and economic restructuring of these states, coercing governments into the adoption of specific financial policies designed to promote debt repayment and economic development
Answer
Answer D. IFIs identified the economic failings of developing countries as being the result of political problems. Thus, IFIs adopted an approach that involved political and economic restructuring of these states, coercing governments into the adoption of specific financial policies designed to promote debt repayment and economic development
Q79: Which of the following statements best describes our understanding of the term ‘globalization’?
- A. Globalization refers to the process by which shared hegemonic values pervade societies across the globe, drawing them into an ideological community, most often based on the economic principles of capitalism
- B. Best described as intensification of worldwide social relations and increasing interdependence, globalization is the result of the compression of space and time through the development of new technologies
- C. Globalization is best described as the ‘shrinking’ of the global community, drawing people into closer contact with one another primarily at the economic and technical levels. This process began in the early 20th century and was based on the ideological expeditions that originated from western Europe
- D. Globalization has occurred since the 1980s, originating in Western Europe as a centre of political power and technological advancement. The process is a direct result of technological advancement in communications and travel industries that facilitate the efficient transportation of physical objects, people and ideas across the globe
Answer
Answer B. Best described as intensification of worldwide social relations and increasing interdependence, globalization is the result of the compression of space and time through the development of new technologies
Q80: In the context of globalization, how can we best define the term ‘development’?
- A. The term development refers to the human condition in which there is freedom from fear and want; there are sufficient resources to sustain life and this life can exist in a state free from the threat, or perceived threat, of sudden interruption
- B. To be considered as developed, a nation must have achieved certain economic and political status within the global state system; the criterion for what constitutes a ‘developed’ state is thus defined by those requirements of interaction in this system
- C. Development is a means to address the inequalities that accompany neoliberal globalization. In this context, development refers to the ability of a population or community to effectively utilize resources and increase efficiency in production and distribution, promoting the more equitable distribution of income within society
- D. Development of a community refers to the ideological and ethical value systems to which its population subscribes. In the globalised international system this refers to the adoption of western liberal democratic ideology and free market economics
Answer
Answer C. Development is a means to address the inequalities that accompany neoliberal globalization. In this context, development refers to the ability of a population or community to effectively utilize resources and increase efficiency in production and distribution, promoting the more equitable distribution of income within society
