India Foreign Trade And Policy Set 1

QN1. The objective of exchange control is:

a) To ensure the availability of sufficient foreign exchange

b) To establish the external value of the domestic currency

c) To prevent flight of capital

d) All of the above

Answer

Answer: d) All of the above

QN2. Which of the following is not a Convertible Currency?

a) Japanese Yen

b) Pound Sterling

c) Deutsche Mark

d) Rouble

Answer

Answer: d) Rouble

QN3. The ratio of foreign exchange to be converted in Indian rupees at the official exchange rate and market determined rate, as introduced under partial convertibility in Union Budget 1992-93 was:

a) 40:60

b) 50:50

c) 60:40

d) 70:30

Answer

Answer: b) 50:50

QN4. Which of the following currencies witnessed a big fall in its exchange rate in 1992?

a) Pound Sterling

b) Japanese Yen

c) Deutsche Mark

d) Swiss Franc

Answer

Answer: a) Pound Sterling

QN5. On the basis of statement to A & B, answer the following questions

A – Spot rate refers to the rate quoted for delivery of foreign exchange in future. B – Bid rate refers to the rate at which bank is willing to buy the currency

a) A is correct

b) B is correct

c) Both A & B are correct

d) Both A & B are wrong

Answer

Answer: b) B is correct

QN6. On the basis of statement A and B answer the following question

I – Sight credit is a term credit

II – Usance credit provides some usance period for the payment

a) Only I is correct

b) Only II is correct

c) Both I & II are correct

d) Both I & II are wrong

Answer

Answer: b) Only II is correct

QN7. Which one of the following is the principal financial institution in India for coordinating working of institutions engaged in; financial exports and imports?

a) Reserve Bank of India

b) Central Bank of India

c) State Bank of India

d) Export-Import Bank of India

Answer

Answer: d) Export-Import Bank of India

QN8. In which of the following international contact terms the seller represents maximum obligations?

a) Free on Board (FOB)

b) Cost and Freight (CFR)

c) Cost Insurance and Freight (CIF)

d) Delivered Duty Paid (DPP)

Answer

Answer: d) Delivered Duty Paid (DPP)

QN9. Export-Import Bank of India was established in:

a) 1947

b) 1971

c) 1982

d) 1997

Answer

Answer: c) 1982

QN10. For the purpose of calculation of Customs Duty in India, foreign exchange value of imported goods is converted into India rupees:

a) at official exchange rate

b) at market exchange rate

c) 50:50 official and market exchange rate

d) 40:60 official and market exchange rate

Answer

Answer: a) at official exchange rate

QN11. Most nations of the world are

a) closed economies

b) open economies

c) self-sufficient

d) non-trading nations

Answer

Answer: b) open economies

QN12. A specific argument advanced for protection is

a) to protect domestic labour against cheap

b) to reduce domestic unemployment

c) to protect infant industries and industries important for national defense

d) all of the above

Answer

Answer: d) all of the above

QN13. Which of the following is not included in the current account section of the BOP

a) The exports of goods and services

b) Import of goods and services

c) Capital inflows

d) Government grants

Answer

Answer: d) Government grants

QN14. A deficit or surplus in a nation’s BOP is measured by subtracting all the debits from the credits in the

a) current account

b) current and capital account

c) current, capital and official reserve accounts

d) capital and official reserves accounts

Answer

Answer: a) current account

QN15. The rate of exchange between the domestic and a foreign currency is defined as the

a) foreign currency price of a unit of the domestic currency

b) domestic currency price of a unit of the foreign currency

c) foreign currency price of gold

d) domestic currency price of gold

Answer

Answer: a) foreign currency price of a unit of the domestic currency

QN16. Under a freely flexible exchange rate system, a deficit in a nation’s BOP is corrected by

a) a decrease in domestic currency price of the foreign currency

b) an appreciation of domestic currency

c) a depreciation of domestic currency

d) a depreciation of foreign currency

Answer

Answer: b) an appreciation of domestic currency

QN17. A series current international economic problem is

a) a lack of generally acceptable rules for intervention in foreign exchange markets

b) world wide inflation

c) sharp rise in petroleum prices development

d) all of the above

Answer

Answer: d) all of the above

QN18. The importance of foreign trade has been because of

a) greater availability of goods

b) better use of country’s resources

c) reduction in cost of production

d) all of the above

Answer

Answer: d) all of the above

QN19. Firm are motivated to export during

a) relative profitability

b) reducing business risk

c) insufficiency of domestic demand

d) all of the above

Answer

Answer: d) all of the above

QN20. The most commonly used method for entering foreign trade market is

a) Licensing

b) Exporting

c) Both of the above

d) None of the above

Answer

Answer: c) Both of the above

QN21. The trade war between the 3 trade giants – USA Japan and European Union is because of

a) huge trade deficits

b) policy of protectionism adopted by them

c) both of above

d) none of the above

Answer

Answer: c) both of above

QN22. Government can discourage import of any commodity by the use of:

a) tariffs

b) quotas

c) boycotts

d) all of the above

Answer

Answer: d) all of the above

QN23. A method used by government to encourage import is

a) relaxation in import of capital goods

b) import substitution

c) psychological barriers

d) legal barriers

Answer

Answer: b) import substitution

QN24. The import of quota used in connection with administration of exchange control is

a) mixing quota

b) import-licensing

c) tariff quota

d) unilateral quota

Answer

Answer: b) import-licensing

QN25. Import subsidy is advantageous under following conditions

a) when domestic production amounts to only a small fraction of total domestic demand

b) when commodities concerned are essential raw materials or adjuncts of production

Answer

Answer: b) when commodities concerned are essential raw materials or adjuncts of production

QN26. The import quota used in connection with administration of exchange control is

a) mixing quota

b) quality of product

c) price of the product

d) none of the above

Answer

Answer: d) none of the above

QN27. Import subsidy is advantageous under following conditions:

a) When domestic production amounts to only a small fraction of total domestic demand

b) When commodities concerned are essential raw materials or adjust of production

c) Both

d) None

Answer

Answer: d) None

QN28. Exchange control has been a popular device used for

a) maintaining the international value of country’s currency

b) preventing capital flight

c) protecting domestic industries

d) all of the above

Answer

Answer: b) preventing capital flight

QN29. Balance of payments is a double entry accounting based on

a) rules of debit and credit

b) exports and imports

c) receipts and payments

d) all of above

Answer

Answer: d) all of above

QN30. Exports in BOP is considered to be

a) debit

b) credit

c) economic activity

d) none of the above

Answer

Answer: d) none of the above

QN31. The balance of goods, services, and transfer payment is sometimes referred to as

a) current balance

b) transfer payment

c) credit

d) debit

Answer

Answer: b) transfer payment

QN32. Custom duties are levied for

a) providing revenue to government

b) protect domestic industry

c) safeguarding BOP

d) all of the above

Answer

Answer: b) protect domestic industry

QN33. Anti-dumping and counter waiting duties are a type of

a) part of subsidies

b) custom duty

c) para-tariff measure

d) none of the above

Answer

Answer: d) none of the above

QN34. The World Trade Organizations was formed after the

a) ECOWAS

b) The Bangkok Agreement

c) Uruguay Round

d) None of the above

Answer

Answer: c) Uruguay Round

QN35. The work on the establishment of a common tariff nomenclature and a common definition of value for customs purposes was done by

a) ASEAN

b) CCC

c) EU

d) GATT

Answer

Answer: c) EU

QN36. The sale of a product at a price lower than that is normally charged in the domestic market of the country of origin is

a) Countervailing

b) Dumping

c) Tariff

d) Custom duty

Answer

Answer: b) Dumping

QN37. A tool for economic analysis which relates the economic activity in a country to its transactions with the rest of the world is

a) BOP

b) Capital account

c) Current account

d) Transfer payments

Answer

Answer: b) Capital account

QN38. The total number of export processing zones in India is

a) 7

b) 10

c) 5

d) 6

Answer

Answer: a) 7

QN39. What is the joint sector in India?

a) It is a venture in which the Government has more than a 50 per cent share

b) A commodity produced by both public and private sectors is said to be in the joint sector

c) It is an enterprise owned jointly by a private and a public company

d) It is an enterprise owned jointly by an Indian and a foreign company

Answer

Answer: b) A commodity produced by both public and private sectors is said to be in the joint sector

QN40. What is the joint section in India?

a. A commodity produced by both public and private sectors is said to be in the joint sector.

b. It is an enterprise owned jointly by an Indian and a foreign company

c. It is an enterprise owned jointly by the private and public sectors

d. It is a venture in which the Government has more than a 50 per cent share ;

Answer

Answer: c. It is an enterprise owned jointly by the private and public sectors