Q.621. ‘Quota’ is
(a) tax levied on imports
(b) imports of capital goods
(c) limit on the quantity of imports
(d) limit on the quantity of exports
Ans: (C)
Notes: An import quota is a limit on the quantity of a good that can be produced abroad and sold domestically. It is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time. The primary goal of import quotas is to reduce imports and increase domestic production of a good, service, or activity, thus “protect” domestic production by restricting foreign competition.
Q.622. ‘PROTECTION’ means
(a) Restrictions imposed on import trade
(b) Protection to home industries
(c) No free exchange of goods and services between two countries
(d) All of the above
Ans: (D)
Notes: Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow (according to proponents) “fair competition” between imports and goods and services produced domestically. It refers to policies or doctrines which protect businesses and workers within a country by restricting or regulating trade with foreign nations.
Q.623. Which one of the following does not deal with export promotion?
(a) Trade Development Authority
(b) Mineral and Metal Trading Corporation
(c) Cooperative Marketing Societies
(d) State Trading Corporation of India
Ans: (C)
Notes: Cooperative marketing is just an extension and application of the philosophy of cooperation in the area of agricultural marketing. It is a process of marketing through a cooperative society, formed for the producers, by the producers. It seeks to eliminate the middlemen between the producer and the consumer, thus getting the maximum price for their produce.
Q.624. Theoretically trade between two countries lakes place on account of
(a) differences in costs
(b) scarcity of goods
(c) comparative differences in costs
(d) need for exports
Ans: (C)
Notes: Trade exists for man due to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions’ size allows for the benefits of mass production thus providing cost advantage of producing the same commodity.
Q.625. Short term loans to correct Balance of Payments problems is given by
(a) I.M.F.
(b) I.B.R.D
(c) I.D.A
(d) A.D.B
Ans: (A)
Notes: Upon initial IMF formation, its two primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, and to provide short-term capital to aid balance-of-payments.
Q.626. Multinational Corporation is also called
(a) Trading Corporation
(b) International Corporation
(c) Finance Corporation
(d) Trans-national Corporation
Ans: (D)
Notes: A Multinational corporation, also known as Transnational Corporation or International corporation, is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries. They play an important role in globalization.
Q.627. Freeing the economy from all unnecessary controls and regulations is referred to as
(a) Freedom
(b) Privatisation
(c) Liberalisation
(d) Globalisation
Ans: (C)
Notes: Economic liberalization is a very broad term that usually refers to fewer government regulations and restrictions in the economy in exchange for greater participation of private entities; the doctrine is associated with classical liberalism. The arguments for economic liberalization include greater efficiency and effectiveness that would translate to a “bigger pie” for everybody. Thus, liberalization in short refers to “the removal of controls”, to encourage economic development.
Q.628. Floating Exchange Rate is also referred to as
(a) Flexible Exchange Rate
(b) Fixed Exchange Rate
(c) Real Exchange Rate
(d) Controlled Exchange Rate
Ans: (A)
Notes: A floating exchange rate or fluctuating exchange rate is a type of exchange rate regime wherein a currency’s value is allowed to fluctuate according to the foreign exchange market. In this sense, it is quite flexible and not something fixed or constant. Such rates automatically adjust, enabling a country to dampen the impact of shocks and foreign business cycles, and to preempt the possibility of having a balance of payments crisis.
Q.629. Countries that depend mainly on the export of primary products for their income, are prone to
(a) inflation
(b) economic instability
(c) increasing unemployment
(d) stable economic growth
Ans: (C)
Notes: Most of the world’s poorest countries depend for increasing export earnings on agricultural products that are vulnerable to fluctuating or declining terms of trade. Disadvantageous terms of technology transfer, protectionism, and decline in financial flows compound the already existing poverty and lack of work. Being labour-intensive, such sectors are prone to various types of unemployment. Developing countries that rely on the export of primary products were hit particularly hard by falling commodity prices between 1980 and 1984.
Q.630. A Trade Policy consists of
(a) Export-Import Policy
(b) Licencing Policy
(c) Foreign Exchange Policy
(d) Balance of Payment Policy
Ans: (A)
Notes: Trade policy, also called Export-Import policy, is a collection of rules and regulations which pertain to trade. Every nation has some form of trade policy in place, with public officials formulating the policy which they think would be most appropriate for their country. Things like import and export taxes, tariffs, inspection regulations, and quotas can all be part of a nation’s trade policy.