TRADE

1. Which of the following is international trade:

9.
A.
B.
C.
A tariff:
Increases the volume of trade
Reduces the volume of trade
Has no effect on volume of trade
A. Trade between provinces D. (a) and (c) of above
B. Trade between regions
C. Trade between countries 10. A tariff is:
D. (b) and (c) of above A. A restriction on the number of export firms
2. Theory of comparative advantage was B. Limit on the amount of imported goods
presented by: C. Tax and imports D.(b) and (c) of above
A. Adam Smith B. Ricardo
C. Hicks D. Arshad 11. Dumping refers to:
A. Buying goods at low prices abroad and
3. Which is NOT an advantage of international selling at higher prices locally
trade: B. Expensive goods selling for low prices
A. Export of surplus production C. Reducing tariffs
B. Import of defence material D. Sale of goods abroad at low a price,
C. Dependence on foreign countries below their cost and price in home
D. Availability of cheap raw materials market

4. If Japan and INDIA start free trade, difference 12. According to Hecksher and Ohlin basic
in wages in two countries will: cause of international trade is:
A. Increase B. Decrease A. Difference in factor endowments
C. No effect D. Double B. Difference in markets
C. Difference in political systems
5. Trade between two countries can be useful if D. Difference in ideology
cost ratios of goods are:
A. Equal B. Different 13. All are advantages of foreign trade
C. Undetermined D. Decreasing EXCEPT:
A. People get foreign exchange
6. Modern theory of international trade is based B. Nations compete
n the views of: C. Cheaper goods
A. Robbins and Ricardo D. Optimum utilisation of country's
B. Adam Smith and Marshall resources
C. Heckcsher and Ohlin
D. Saleem and Kareem 14. Two countries can gain from foreign
trade if:
7. Foreign trade creates among countries: A. Cost ratios are different
A. Conflicts B. Cooperation B. Tariff rates are different
C. Hatred D. Both (a) & (b) C. Price ratios are different
D. (a) and (c) of above
8. Net exports equal:
A. Exports x Imports 15. International trade and domestic trade
B. Exports + Imports differ because of:
C. Exports - Imports A. Trade restrictions
D. Exports of services only B. Immobility of factors
C. Different government policies
D. All of the above A. Consumers have to pay higher prices
B. Producerrs get higher profits
16. Terms of trade of developing countries are C. Quality of goods may be affected
generally unfavourable because: D. All of the above
A. They export primary goods
B. They import value added goods 24. It is drawback of free trade:
C. They export few goods A. Prices of local goods rise
D. (a) and (b) of above B. Government looses income from
custom duties
17. Term of trade of a country show: C. National resources are underutilized
A. Ratio of goods exported and imported D. (a) and (b) of above
B. Ratio of import duties
C. Ratio of prices of exports and imports 25. Gold standard means:
D. (a) and (c) of above A. Currency of the country is made of gold
B. Paper currency is not used
18. In a free trade world in which no C. Currency of the country is freely
restrictions exist, international trade convertible into gold
will lead to: D. (a) and (c) of above
A. Reduced real living standard
B. Decreased efficiency 26. Terms of trade of a country:
C. Increased efficiency A. Mean the trade agreement between trading
D. Reduced real GDP countries
B. Is another name of exchange ratio of two
19. Govt. policy about exports and imports currencies
is called: C. Show the ratio between total export earnings
A. Monetary policy B. Fiscal policy and import bill of a country
C. Commercial policy D. Finance policy D. Are determined by the price index of export
and import goods
20. What would encourage trade between
two countries: 27. INDIA's terms of trade:
A. Different tax system B. Frontier checks A. Have risen over past few years
C. National currencies D. Reduced tariffs B. Have fallen over past few years
C. Always remain above 100
21. "Terms of trade" between two countries D. Are determined by federal govt.
refer to a ratio of:
A. Export prices to import prices 28. Exchange value of IND rupee against
B. Currency values other currencies has fallen because:
C. Exports to imports A. Our total exports are smaller
D. Balance of trade to balance of B. Our imports are more than exports
payments C. Exports are more than imports
D. INDIA does not produce gold
22. What would encourage trade between two
countries? 29. This is an advantage of foreign trade:
A. Different tax system B. Quality control A. We can preserve our natural resources
C. Reduced tariffs D. Fixing import B. New technology comes to the country
quota C. People need not go abroad
D. We can get foreign currencies
23. It is drawback of protection:
30. This is NOT an advantage of foreign C. Comparative trade
trade: D. Comparative returns
A. We can get gold from abroad
B. New technology comes to the country 37. The theory explaining trade between
C. We can import goods which are in short two countries is called:
supply in INDIA A. Comparative disadvantage theory
D. We can made best use of natural B. Comparative cost theory
resources C. Comparative trade theory
D. None of the above

31. Foreign trade: 38. Trade between two countries takes place
A. Increases employment opportunities when:
B. Increases international mobility of A. Cost ratios of commodities are equal
labour B. Cost ratios of commodities are different
C. Increases competition C. Cost ratios of commodities are high
D. All of the above D. Cost ratios of commodities are low

32. Foreign trade: 39. David Ricardo presented the theory of

A. Benefits developed countries international trade called:
B. Benefits underdeveloped countries A. Theory of absolute advantage
C. Benefits democratic countries B. Theory of comparative advantage
D. Benefits all countries C. Theory of equal advantage
D. Theory of total advantage
33. Foreign trade has the advantage:
A. Trading countries get foreign exchange 40. Rich countries have deficit in their
B. Can import scarce raw materials balance of payments:
C. Can import machinery and technology A. Sometimes B. Never
D. (b) and (c) of above C. Alternate years D. Always

34. In foreign trade, Protection policy 41. Balance of payments means:

means: A. The balance of receipts and payments of all
A. Restrictions on exports banks
B. Restriction on transfer of foreign B. The balance of receipts and payments of
exchange State Bank
C. Restrictions on imports C. The balance of receipts and payments of
D. All of the above foreign exchange by a country
D. The balance of govt. receipts and payments
35. If a country decreases the external
value of its currency, it will affect: 42. INDIA is not a member of:
A. Volume of exports A. IMF B. ECO
B. Volume of imports C. OPEC D. World Bank
C. General price level
D. All of the above 43. International trade is possible primarily
through:
36. The theory explaining trade between two A. Generalization in production of all goods
countries is called: B. Specialization in production of one good
A. Comparative advantage C. Specialization in production of a few goods
B. Comparative bargain D. All of the above
 A. Inland point B. Regional ports
44. INDIA imports some goods and exports C. Dry ports D. Private ports
other goods primarily because of:
A. Free goods B.Comparative advantage 62. The balance of payments account of
C. Unemployment D.Self sufficiency INDIA is prepared by:
A. Government of INDIA
45. A country that does not trade with B. National Bank of INDIA
other countries is called: C. Reserve Bank of INDIA
A. Developed economy D. Export Bureau of INDIA
B. Closed economy
C. Independent economy 63. INDIA exports these goods:
D. None of the above A. Ready-made garments, computers, rice
B. Rice, leather products, tractors
46. To increase exports, INDIA must: C. Cotton, yarn, fish, rice
A. Improve quality of goods D. Ready made garments, edible oil, rice
B. Decrease the value of its currency
C. Import cheap labour 64. INDIA imports these goods:
D. (a) and (b) of above A. Machinery, tea, fish
B. Machinery, petroleum, fish
47. Policy of Protection in trade: C. Tea, fish, fertilizer
A. Facilitates trade D. Machinery, oil,
B. Protects foreign producers
C. Protects local producers
D. Protects exporters

48. INDIA's exports mainly consists of

products:
A. Semi-manufactured and manufactured
goods
B. Primary goods
C. Manufactured goods
D. Food products

49. INDIA's exports mainly consists of

products:
A. Semi-manufactured
B. Machinery
C. Minerals
D. Services

50. The largest item in our import list is:

A. Consumer goods
B. Machinery
C. Petroleum
D. Computers

61. To facilitate foreign trade, INDIA has

established in different cities: