Question 1

Which one is not associated with the UNO

Accepted Answer

ASEAN (Association of Southeast Asian Nations) is not associated with the United Nations Organization (UNO), whereas ILO (International Labour Organization) and WHO (World Health Organization) are specialized agencies of the UN.

Question 2

Which of the following is the main objective behind the establishment of WTO

Accepted Answer

The main objective behind the establishment of the World Trade Organization (WTO) encompasses all the given options: to settle disputes between nations, to widen the principle of free trade to sectors such as services and agriculture, and to cover more areas than its predecessor, the General Agreement on Tariffs and Trade (GATT).

Question 3

" Term of trade " between two countries refer to a ratio of

Accepted Answer

The term of trade between two countries refers to the ratio of export prices to import prices. This ratio helps in determining how much import goods a country can get for a unit of its export goods, essentially measuring the country's trading advantage or disadvantage.

Question 4

WTO comes as the third economic pillar of world-wide dimensions along

Accepted Answer

The World Trade Organization (WTO) is considered the third economic pillar of worldwide dimensions alongside the International Monetary Fund (IMF) and the World Bank, not the options listed as B, C, or D. The IMF focuses on monetary cooperation and financial stability, while the World Bank aims at long-term economic development and poverty reduction.

Question 5

Gold standard means

Accepted Answer

The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. This system ensures that the government can only print as much money as its country has in gold, thus preventing inflation. However, it does not mean that paper currency is not used; rather, the paper currency is backed by gold, making it convertible into a set amount of gold.

Question 6

Underlying the application of the monopolistic competition model to

Accepted Answer

The answer of Underlying the application of the monopolistic competition...

Question 7

Which of the following trade policies limits specified quantity of goods to be

Accepted Answer

Quotas specifically limit the quantity of goods that can be imported or exported, directly controlling the volume of trade. Tariffs, whether import or specific, impose a tax on goods but do not directly limit quantities.

Question 8

Since 1980s which of the following changes has happened in the world trade?

Accepted Answer

Since the 1980s, there have been significant shifts in global trade patterns. The share of "north-north" trade (trade between developed countries) has decreased, while "south-south" trade (trade between developing countries) has increased. Additionally, the share of agricultural produce in total merchandise exports has decreased, as the global economy has become more industrialized and services-oriented.

Question 9

According to Ricardo, a country will have a comparative advantage in:

Accepted Answer

Ricardo's theory of comparative advantage suggests that a country will have a comparative advantage in industries where it can produce goods at a lower opportunity cost than other countries, regardless of whether those goods are sold domestically or internationally. This means industries that sell to both domestic and foreign buyers can exhibit comparative advantage.

Question 10

If a country has a linear (downward sloping) production possibilities

Accepted Answer

A linear (downward sloping) production possibilities curve indicates constant opportunity costs, as the slope of the line (representing the rate at which one good can be substituted for another) remains unchanged.

Question 11

Which of the following is one of the conclusions of New Trade Theory

Accepted Answer

New Trade Theory suggests that trade can increase the variety of goods available to consumers and that consumers benefit from this increased variety. This theory diverges from traditional trade theories by emphasizing the role of economies of scale and market competition in determining trade patterns.

Question 12

According to the argument for protection, tariffs can shield new industries from import competition until they have grown strong and efficient enough to withstand the competition by foreign producers.

Accepted Answer

The correct answer is the Infant industry argument. This argument suggests that new or "infant" industries in a country may initially be unable to compete with established foreign producers. Tariffs can protect these nascent industries from international competition until they become sufficiently developed and competitive.

Question 13

Which of the following does not form part of current account under balance of

Accepted Answer

Capital receipts and payments are part of the capital account, not the current account. The current account includes transactions like the export and import of goods and services, and income receipts and payments.

Question 14

Gifts and Relief are

Accepted Answer

Gifts and relief are considered transfer payments because they are one-way payments without any exchange of goods or services in return.

Question 15

A country is said to be in debt trap if

Accepted Answer

A debt trap occurs when a country needs to take on new debt to repay existing interest on its loans, indicating a cycle of borrowing that becomes difficult to escape.

Question 16

The effective rate of protection

Accepted Answer

The effective rate of protection measures the percentage increase in the value added by domestic industries due to tariffs. It accounts for the difference in tariffs on finished goods and the tariffs on their inputs, showing how tariffs effectively protect domestic industries by increasing their value added.

Question 17

Which type of tariff is expressly forbidden by the U.S. Constitution?

Accepted Answer

The U.S. Constitution prohibits export tariffs, meaning taxes on goods being shipped out of the country, to encourage free trade and prevent states from imposing taxes that could harm other states' economies.

Quiz 1: International Trade and Economics