1 Which of these is an example of specialization a German so

1. Which of these is an example of specialization?

a) German socks b) French watches c) Japanese cigars d) Scottish whisky

2. Investment by firms like Toyota in UK factories is an example of

a) Dumping b) Sovereign tax breaks c) Foreign direct investment d) Trade specialization

3. A possible downside to introducing trade barriers like tariffs is

a) Consumers will save more b) Other countries will retaliate c) Import prices will fall d) Competitors will resort to dumping

4. An argument in favour of imposing trade barriers is that they may

a) Encourage more imports b) Result in greater consumer choice c) Avoid international law d) Protect new or small industries

5. What provides the greatest gain from international trade?

a) Collaboration b) Specialization c) Investment d) Opportunity Cost

6. When one producer can create a given amount of output with fewer inputs, what exists?

a.) Comparative advantage b.) Comparative disadvantage c.) Absolute advantage d.) Absolute disadvantage

7. Contolia can make 20 tractors or 10 litres of milk in a day. Magnolia can make 100 tractors or 20 litres of milk in a day. Which country has a comparative advantage in making tractors?

8. An increase in technology will allow a nation to produce more

a) Even if it does not have more land, labour or capital b) Only if it has more of all factors of production c) Only if it has more land d) Only if it has more labour e) Only if it has more capital

9. Consider the following statement: “After the government of Syldavia caused the currency, the Kroona, to appreciate, citizens began wondering when the government would raise the price level as well.” Comment briefly on this statement giving clear reasons.

10. A nation has a working age population of 100 million, with 85 million working and 10 million unemployed but not seeking work. The labour force participation rate is

a) 85% b) 90% c) 10% d) 95% e) 11.17%

Solution

1. B is Correct as there all the swiss watches are manufactured in france they have specialisation in making swiss watches.

2. C is Correct Investment by toyota is an e.g of FDI

3. B is Correct Imposition of Trade Barriers will decrease the profits

4. D is correct Trade barrier is introduced to benefit the new or small industries.

5. A is Correct as collaboration will help in making manufacturers in domestic country aware of the new technology and helps in making them more efficient.

6. A is Correct this is the definition for comparative advantage in abso;lute advantage producing more goods with simmilar resources is differing.

7. Magnolia has comparative advantage over Contolia

8. B is Correct only technology is not important in production all other factors also play critical role in manufacturing.

9. Only after the increase in price levels comes a situation which would decrease the effect of currency appreciation and more and more export will lead to appreciation of sylvadia currency.

8. Labour Rate Participation is 85/100=85% therfore a is correct.