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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. Trade in differentiated products are also called
2. Which among the following is true with regard to the PPP theory?
3. Balance of payments means:
4. What is the effect of an increase in taxes under fixed exchange rates and perfect asset substitutability in the short run?
5. A sudden shift from import tariffs to free trade may induce short-term unemployment in:
6. You have an opportunity to invest in Australia at an interest rate of 8%. Moreover, you expect the Australian dollar (A$) to appreciate by 2%. Your effective return from this investment is:
7. Given a system of floating Exchange rates, falling income in the United States would trigger:
8. Absolute advantage theory assumes
9. If the dollar depreciates, this likely will cause
10. The balance of payments equals:
11. If the value of the pound in other currencies is strong, then other things being equal:
12. If the central bank purchases assets, it will result in:
13. Which one of the following statements is the most accurate?
14. Pure theory of international trade is termed so because
15. Hedcging refers to
16. The _______________ records all international financial transactions that involve resident of the country concerned- changing either his assets with or his liabilities to a resident of another country.
17. PPP theory is associated with the determination of _______
18. Which of the following statements is correct?
19. Which of the following is NOT a motive for international asset trade?
20. Suppose Mexico and the United States were the only two countries in the world. There exists anexcess supply of pesos on the foreign exchange market. This suggests that:
21. The principle of comparative advantage was first introduced by
22. Within the circular flow of income, an increase in domestic income will tend to increase
23. 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?
24. Which one of the following statements is the most accurate?
25. What is the effect of an increase in taxes under fixed exchange rates and perfect asset substitutability in the short run?

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