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The Leontief Paradox in international trade empirically challenged which established trade theory?
ADavid Ricardo's Comparative Advantage
BHeckscher-Ohlin Model
CAdam Smith's Absolute Advantage
DRostow's Growth Model
The Terms of Trade (TOT) of a country measure the ratio of:
ATotal Foreign Debt to GDP
BGross Exports to Gross Imports
CNominal Exchange Rate to Real Exchange Rate
DExport Prices to Import Prices (Px / Pm) × 100
An import quota restricts trade by directly limiting:
AThe price at which foreign goods are sold
BThe physical quantity of a good that may be imported
CThe tax revenue collected on foreign goods
DThe currency exchange rate
The J-Curve effect in international economics illustrates that after currency devaluation, a country’s trade balance initially:
ADeteriorates in the short run before improving in the long run
BImproves immediately, then deteriorates
CRemains unchanged indefinitely
DCauses immediate capital flight
The Singer-Prebisch thesis argues that developing nations face long-term secular deterioration in their:
ADomestic tax revenue collection rates
BInflation rates relative to developed countries
CTerms of Trade when exporting primary commodities to developed nations
DIndustrial labor productivity
The Foreign Trade Multiplier measures the change in national income resulting from a unit change in:
ADomestic Interest Rates
BForeign Exchange Reserves
CTariff Rates
DAutonomous Exports
The Big Push Theory of economic development, advocated by Paul Rosenstein-Rodan, emphasizes the need for:
ASmall incremental investments in agriculture
BA massive, coordinated investment package across interdependent industries
CComplete reliance on foreign aid loans
DUnregulated free market forces
Ragnar Nurkse’s concept of the ‘Vicious Circle of Poverty’ highlights that poor countries remain poor primarily because:
AForeign trade is illegal
BLow income leads to low savings, low investment, and low capital accumulation, resulting back in low income
CGovernment tax rates are zero
DPopulation growth is zero
Arthur Lewis’s Dual Sector Model of development assumes that the agricultural sector possesses:
AUnlimited supply of surplus labor with zero marginal productivity
BExcess capital reserves
CHigh technological innovation
DRigid wage structures set by global markets
High-powered money (Monetary Base or M0) issued by the central bank consists of:
ABroad money (M3) minus gold reserves
BGovernment bonds and Treasury bills only
CCommercial bank demand deposits
DCurrency in circulation plus bank reserves held at the central bank