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71.

What does the modern theory of international trade predict regarding difference in factor prices between nations on account of trade? The difference:

A.	Increases	B.	Diminishes
C.	Remains the same	D.	Either diminishes or increases

72.

The multiple exchange rates were first employed by:

A.	Brazil	B.	Ecuador
C.	Germany	D.	Peru

73.

Which of the following statements is not correct?

A.	Devaluation can have only temporary effects and it may provoke other countries to retaliate	B.	Many countries of Europe resorted to exchange clearing agreements during the 1930s
C.	The balance of payments of a country is a balance sheet showing the country's foreign assets and liabilities at any given period of time	D.	The concept of single factoral terms of trade was developed by Jacob Viner.

74.

Under the flexible exchange rate system, the exchange rate is determined by:

A.	The central bank of the country	B.	The forces of demand and supply in the foreign exchange market
C.	The price of gold	D.	The purchasing power of currencies

75.

The elasticity of demand for foreign exchange for financing capital outflow is:

A.	Zero	B.	Greater than zero
C.	One	D.	Less than infinity

76.

The foreign exchange market performs the function of:

A.	Transfer of purchasing power	B.	Provisions of credit for financing foreign trade
C.	Furnishing facilities for hedging foreign exchange risks	D.	All of the above

77.

According to the Heckscher-Ohlin theory of international trade the most important cause of differences in relative commodity pries and trade between nations is the differences in:

A.	Consumer tastes and preferences	B.	Factor endowments
C.	Knowledge and technology	D.	Demand conditions

78.

On which of the following is the law of comparative costs based?

A.	Labour theory of value	B.	Opportunity cost theory
C.	Law of diminishing returns	D.	Both (a) and (b)

79.

Which among the following, is not an assumption of the classical - territory of comparative cost advantage?

A.	Labour is the only factor of production	B.	Production takes place under diminishing returns
C.	There are no tariffs	D.	Prices are determined by their real labour costs of production

80.

Developing countries usually complain of:

A.	Detoriation in their terms of trade	B.	Serious hurdles in the way of export promotion
C.	Uncertainty and inadequacy of reign aid	D.	All of the above