Economics is the social science that analyzes the production, distribution, and consumption of goods and services.

Monday, 5 December 2011

Example Multiple Choice Questions

Example Multiple Choice Questions: Chapter 5

1.                1.   An economy that trades with other countries has which kind of economy?
A.                  Import
B.                  Export
C.                  Closed
D.                 Open

2.               2.    Which of the statements is the best define of quota?
A.                  Encourage free trade
B.                  Are a tax on imported goods
C.                  Set number of units goods that can be imported
D.                 The minimum quantity of the goods can be imported

3.               3.    What impact will a tariff have on imported car?
A.                  The tariff will make cars more expensive domestically
B.                  The tariff will make cars more cheaper domestically
C.                  The tariff will encourage the investment
D.                 The tariff will decrease unemployment

4.                4.   Which of the following is one of the balance of payments accounts?
A.                  Government spending account
B.                  Capital ac count
C.                  Reserve account
D.                 Net borrowing accounts

5.               5.    Which policy tends to reduce the balance of payments deficit?
A.                  An increase in import tariff
B.                  A reduction in government spending
C.                  A reduction in the level of interest rates
D.                 A rise in the country’s currency exchange rate

6.               6.    What would result from a devaluation of a country’s exchange rate?
A.                  An increase in domestic currency price of imports
B.                  An increase in the foreign currency price of exports
C.                  An increase in the foreign currency price of imports
D.                 A reduction in the domestic currency price of exports