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International Economics Practice Test
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International economics covers the effects upon economic activity from international differences in productive resources and consumer preferences and the international institutions that affect them.
International economics plays a crucial role in understanding and shaping the global economy. It helps explain the benefits and challenges of international trade, the effects of globalization on different economies, and the impact of economic policies on domestic and foreign markets.

International Economics Practice Test
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25 Questions

1. What is the effect of a currency devaluation under fixed exchange rates in the short run?
2. If there were a balance of payments deficit then in a floating exchange rate system:
3. The value to American residents of income earned from overseas investments shows up in which account in the U.S. balance of payments?
4. Within the circular flow of income, an increase in domestic income will tend to increase
5. A common or single market will have all of the following features except:
6. Which among the following best explains the difference between Trade in Invisibles and merchandise trade?
7. Govt. policy about exports and imports is called:
8. Starting at the point of equilibrium between the money supply and the money demand, an increase in the domestic money supply causes the value of the home currency to:
9. If the exchange rate is below the equilibrium level then in a floating exchange rate system:
10. Which among the following are the central themes of Mercantilism?
11. Recardo’s Law of Comparitive advantage is based on
12. If Canada runs a current account surplus and exchange rates are floating:
13. To financelarge U.S. federal Budget deficits, the Federal Reserve increases the money supply. This leads to a surplus of dollars world wide. What happens to the U.S. dollar and trade?
14. Which of the following is NOT an argument for a country allowing its currency to float freely?
15. A trade-diverting customs union results in:
16. If interest rates on the euro are consistently below U.S. interest rates, then for the international Fisher effect (IFE) to hold:
17. Which two institutions decide the Union's budget?
18. law of one price prevails when
19. If { } > { } when K= capital and L= labour, Pk is price of capital and Pl is price of labour and A and B are countries then
20. If there is a decline in output, to keep the exchange rate fixed, the central bank has to:
21. The ability to produce more of a good or service than competitors, using the same amount of resources is
22. A fall in the external value of a currency:
23. What is the Metzler paradox?
24. Which one of the following statements is the most accurate?
25. What is 'immiserizing growth'?

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