1. Assertion (A): A change in the income terms of trade is an indicator of welfare.
Reason (R): Income terms of trade measure the quantity of imports bought by exports.

2. In a three-country two-commodity model, countries being of unequal sizes, the domestie exchange ratio are as under: Country Domestic Exchange Ratio
1 2a : 1b
2 1a : 1b
3 1a : 2b As per this model, the stability in international trade is most likely at the international terms of trade of

3. The above graph shows different effects of tariffs in partial equilibrium. Which one of the following indicates the revenue effect of a tariff equal to PP1 per unit?

4. An Optimum tariff

5. If the demand of the domestic consumers is infinitely elastic and the supply of the foreign producer is perfectly inelastic, then the whole of the tariff will

6. Assertion (A): Special Drawing Rights (SDRs) have the characteristics of an international currency.
Reason (R): SDRs were introduced to increase international liquidity

7. In Heckscher-Ohlin theory of international trade, the most important source of difference in relative commodity prices between nations is a difference in

8. The flexible exchange rate has a number of advantages. Which one of the following is not to be considered as such an advantage?

9. A tariff will not have any effect on revenue if the duty imposed is

10. Assertion (A) : Free international trade necessarily lowers the real wage of the scarce factor of production in terms of any good.
Reason (R) : If the real wage declines in terms of every good, real income must suffer regardless of the tastes and expenditure patterns of the labourers as consumers.

11. Which of the following items were responsible for most of the increase in international liquidity since World War-II?

1. Gold
2. Dollars
3. Other Convertible Currencies
4. SDRs
Select the correct answer using the codes given below:

12. Consider the following statements: Under the gold-standard inflow of gold from the deficit to the surplus nation results in
1. a fall in the interest rate in the surplus nation.
2. a fall in the interest rate in the deficit nation.
3. an outflow of capital from surplus to deficit nation.
4. an outflow of capital from deficit to surplus nation. Of the above statements:

13. In respect of the production possibility curve under increasing opportunity costs given above, consider the following statements:
1. The production possibility curve is not indentical with price curve as in the case of constant costs.
2. There would be complete specialisation of a co untry in a single com m o dity in a tw ocommodities and two countries model. Which of the statements is/are correct?

14. Assertion (A): The Ricardian theory of comparative costs is based on the labour theory of value.
Reason (R): Labour theory of value holds good in domestic trade, but breaks down when applied to international trade.

15. One of the advantages of free trade is improvement in the distribution of income. Free trade thus results in some income redistribution by

16. Which one of the following represents capital account convertibility of a currency?

17. Consider the following statements : Under the Gold standard system, represented
1. Common unit value.
2. International means of payment
3. A store of value Which of these statements are correct?

18. Dusenberry was of the opinion that less developed countries will have serious and adverse effect on their balance of payments due to

19. Consider the following statements: Devaluation results in a
1. rise in the domestic price of imports
2. rise in the domestic price of exports
3. rise in the domestic price of exports and imports
4. fall in the foreign price of exports Which of the above statements are correct?

20. Assertion (A): The gains from trade are determined by the terms of trade.
Reason (R): The gains from trade depend on the differences in comparative cost ratios.

21. In a word, with only two goods, X and Y, and the full employment of factors, a rise in the price of a commodity, X, leads to

22. Assertion (A): Factor price equalisation theorem deals with the effect of trade on factor prices.
Reason (R): Trade in goods has no effect on factor prices.

23. The main objective of the World Trade Organization is to secure among others

24. Which one of the following pairs is not correctly matched?

25. For a closed economy having no foreign trade which one of the following is correct?