76 + Interview Questions in INTERNATIONAL ECONOMICS IN GENERAL AWARENESS Page 2 InterviewSolution

51.	What is the main difference between Adam Smith and Ricardo with regard to the emergence of foreign trade?
Answer» Adam Smith Foreign Trade: 1. According to Adam Smith the basis of International trade was absolute cost advantage. 2. Trade between two countries would be mutually beneficial when one country produces a commodity at an absolute cost advantage. 3. Adam Smith argued that all nations can be benefitted when there is free trade and specialisation interms of their absolute cost advantage. Ricardo Foreign Trade: 1. Ricardo demonstrates that the basis of trade is the comparative cost difference. 2. Trade can take place even if the absolute cost difference is absent but there is comparative cost difference. 3. According to Ricardo a country can gain from trade when it produces at relatively lower costs.

51.

What is the main difference between Adam Smith and Ricardo with regard to the emergence of foreign trade?

Answer»

Adam Smith Foreign Trade:

1. According to Adam Smith the basis of International trade was absolute cost advantage.

2. Trade between two countries would be mutually beneficial when one country produces a commodity at an absolute cost advantage.

3. Adam Smith argued that all nations can be benefitted when there is free trade and specialisation interms of their absolute cost advantage.

Ricardo Foreign Trade:

1. Ricardo demonstrates that the basis of trade is the comparative cost difference.

2. Trade can take place even if the absolute cost difference is absent but there is comparative cost difference.

3. According to Ricardo a country can gain from trade when it produces at relatively lower costs.

Discussion

52.	The New Export – Import policy gives a further push to ……….. (a) Liberalisation (b) Mixed system (c) Capitalism (d) Socialism
Answer» (a) Liberalisation

Discussion

53.	State the objectives of Foreign Direct Investment.
Answer» Objectives of FDI: FDI has the following objectives. 1. Sales Expansion 2. Acquisition of resources 3. Diversification 4. Minimization of competitive risk. FDI may help to increase the investment level and thereby the income and employment in the host country. Direct foreign investment may facilitate transfer of technology to the recipient country. FDI may also bring revenue to the government of host country when it taxes profits of foreign firms or gets royalties from concession agreements. A part of profit from direct foreign investment may be ploughed back into the expansion, modernization or development of related industries. It may kindle a managerial revolution in the recipient country through professional management and sophisticated management techniques. Foreign capital may enable the country to increase its exports and reduce import requirements. And thereby ease BoP disequilibrium. Foreign investment may also help increase competition and break domestic monopolies. If FDI adds more value to output in the recipient country than the return on capital from foreign investment, then the social returns are greater than the private returns on foreign investment. By bringing capital and foreign exchange FDI may help in filling the savings gap and the foreign exchange gap in order to achieve the goal of national economic development. Foreign investments may stimulate domestic enterprise to invest in ancillary industries in collaboration with foreign enterprises.

53.

State the objectives of Foreign Direct Investment.

Answer»

Objectives of FDI:

FDI has the following objectives.

1. Sales Expansion

2. Acquisition of resources

3. Diversification

4. Minimization of competitive risk.

FDI may help to increase the investment level and thereby the income and employment in the host country.
Direct foreign investment may facilitate transfer of technology to the recipient country.
FDI may also bring revenue to the government of host country when it taxes profits of foreign firms or gets royalties from concession agreements.
A part of profit from direct foreign investment may be ploughed back into the expansion, modernization or development of related industries.
It may kindle a managerial revolution in the recipient country through professional management and sophisticated management techniques.
Foreign capital may enable the country to increase its exports and reduce import requirements. And thereby ease BoP disequilibrium.
Foreign investment may also help increase competition and break domestic monopolies.
If FDI adds more value to output in the recipient country than the return on capital from foreign investment, then the social returns are greater than the private returns on foreign investment.
By bringing capital and foreign exchange FDI may help in filling the savings gap and the foreign exchange gap in order to achieve the goal of national economic development.
Foreign investments may stimulate domestic enterprise to invest in ancillary industries in collaboration with foreign enterprises.

Discussion

54.	Foreign direct investments not permitted in India ………. (a) Banking (b) Automic energy (c) Pharmaceutical (d) Insurance
Answer» (b) Automic energy

Discussion

55.	Who among the following enunciated the concept of single factoral terms of trade? (a) Jacob Viner(b) G.S.Donens (c) Taussig (d) J.S.Mill
Answer» (a) Jacob Viner

Discussion

56.	……….. trade refers to the trade or exchange of goods and services between two or more countries.(a) Internal (b) External (c) International (d) Domestic
Answer» International trade refers to the trade or exchange of goods and services between two or more countries.

Discussion

57.	If trade is done on large scale it is called ………. (a) Whole sale trade (b) State trade (c) Central trade (d) World trade
Answer» (a) Whole sale trade

Discussion

58.	Which of the following is not correctly matched.(a) Intra – regional trade – Internal trade (b) World Bank – IMF (c) Types of Exchange Rate – Fixed exchange rate system (d) Equillibrium Exchange Rate – David Ricardo
Answer» (d) Equillibrium Exchange Rate – David Ricardo

Discussion

59.	A. Internal Trade – (i) International trade B. Modem Theory – (ii) Labour C. Classical Theory – (iii) Geographical boundariesD. Modem Theory – (iv) Eli Heckscher Codes:(a) A (ii) B (iii) C (iv) D (i ) (b) A (iii) B (i) C (ii) D (iv) (c) A (iv) B (ii) C (i) D (iii) (d) A (i) B (iv) C (iii) D (ii)
Answer» (b) A (iii) B (i) C (ii) D (iv)

Discussion

60.	The New Export Import policy was implemented in …………. (a) 1990 – 1995 (b) 1991 – 1996 (c) 1992 – 1997 (d) 1993 – 1998
Answer» (c) 1992 – 1997

Discussion

61.	The World Trade organisation is a ………….. (a) Promote of private foreign investment (b) Promoter of International monetary co-operation (c) Lateral trade agreement (d) New trade body to settle trade disputes between nations
Answer» (d) New trade body to settle trade disputes between nations

Discussion

62.	Which of the following is not correctly matched.(a) FOREX – Foreign Exchange (b) WTO – World Trade Organisation (c) FDI – Foreign Direct Investment (d) IBRD – india Bank Recruitment Development
Answer» (d) IBRD – india Bank Recruitment Development

Discussion

63.	Trade between two countries is known as ………. trade (a) External (b) Internal (c) Inter – regional (d) Home
Answer» Trade between two countries is known as External trade.

Discussion

64.	Explain the relationship between Foreign Direct Investment and economic development?
Answer» Foreign Direct Investment (FDI) and Trade: 1. FDI is an important factor in global economy. 2. Foreign trade and FDI are closely related. In developing countries like India 3. FDI in the natural resource sector, including plantations, increases trade volume. 4. Foreign production by FDI is useful to substitute foreign trade. 5. FDI is also influenced by the income generated from the trade and regional integration schemes. 6. FDI is helpful to accelerate the economic growth by facilitating essential imports needed for carrying out development programmes like capital goods, technical know-how, raw materials and other inputs and even scarce consumer goods. 7. FDI may be required to fill the trade gap. 8. FDI is encouraged by the factors such as foreign exchange shortage, desire to create employment and acceleration of the pace of economic development. 9. Many developing countries strongly prefer foreign investment to imports. 10. However, the real impact of FDI on different sections of an economy.

64.

Explain the relationship between Foreign Direct Investment and economic development?

Answer»

Foreign Direct Investment (FDI) and Trade:

1. FDI is an important factor in global economy.

2. Foreign trade and FDI are closely related. In developing countries like India

3. FDI in the natural resource sector, including plantations, increases trade volume.

4. Foreign production by FDI is useful to substitute foreign trade.

5. FDI is also influenced by the income generated from the trade and regional integration schemes.

6. FDI is helpful to accelerate the economic growth by facilitating essential imports needed for carrying out development programmes like capital goods, technical know-how, raw materials and other inputs and even scarce consumer goods.

7. FDI may be required to fill the trade gap.

8. FDI is encouraged by the factors such as foreign exchange shortage, desire to create employment and acceleration of the pace of economic development.

9. Many developing countries strongly prefer foreign investment to imports.

10. However, the real impact of FDI on different sections of an economy.

Discussion

65.	Terms of Trade of a country show ………… (a) Ratio of goods exported and imported (b) Ratio of import duties (c) Ratio of prices of exports and imports(d) Both (a) and (c)
Answer» (c) Ratio of prices of exports and imports

Discussion

66.	Foreign trade increases worker’s welfare atleast ………ways.(a) Two (b) Three (c) Four (d) Five
Answer» Foreign trade increases worker’s welfare atleast Four ways.

Discussion

67.	The role of WTO is to regulate trade among the nations of the ……… (a) Trade (b) Organisation (c) World (d) Regulation
Answer» The role of WTO is to regulate trade among the nations of the World.

Discussion

68.	Foreign trade means ………..(a) Trade between nations of the world (b) Trade among different states (c) Trade among two states (d) Trade with one nation
Answer» (a) Trade between nations of the world

Discussion

69.	Which of the following factors influence trade? (a) The stage of development of a product(b) The relative price of factors of productions (c) Government(d) All of the above.
Answer» (d) All of the above.

Discussion

70.	In general, a primary reason why nations conduct international trade is because …………(a) Some nations prefer to produce one thing while others produce another (b) Resources are not equally distributed among all trading nations (c) Trade enhances opportunities to accumulate profits (d) Interest rates are not identical in all trading nations
Answer» (b) Resources are not equally distributed among all trading nations

Discussion

71.	International trade differs from domestic trade because of ……. (a) Trade restrictions (b) Immobility of factors (c) Different government policies (d) All the above
Answer» (d) All the above

Discussion

72.	……….. items means the imports and exports of services and other foreign transfer transactions.(a) Invisible (b) Visible(c) Exports (d) Imports
Answer» Invisible items means the imports and exports of services and other foreign transfer transactions.

Discussion

73.	Favourable trade means value of exports are ………. Than that of imports. (a) More (b) Less (c) More or Less (d) Not more than
Answer» Favourable trade means value of exports are More Than that of imports.

Discussion

74.	………….. means value of imports is in excess of the value exports. (a) Balance of Trade (b) Unfavourable balance of trade (c) Favourable balance of trade (d) Export trade
Answer» (b) Unfavourable balance of trade

Discussion

75.	If the value of exports is greater than value of imports then it is known as ………… terms of trade. (a) Unfavourable (b) Favourable (c) Moderate (d) Low
Answer» (b) Favourable

Discussion

76.	…………….. means imports and exports of commodities. (a) EXIM (b) Visible items (c) Non visible items (d) Foreign exchange
Answer» (b) Visible items

Discussion

Explore topic-wise InterviewSolutions in .

What is the main difference between Adam Smith and Ricardo with regard to the emergence of foreign trade?

The New Export – Import policy gives a further push to ……….. (a) Liberalisation (b) Mixed system (c) Capitalism (d) Socialism

State the objectives of Foreign Direct Investment.

Foreign direct investments not permitted in India ………. (a) Banking (b) Automic energy (c) Pharmaceutical (d) Insurance

Who among the following enunciated the concept of single factoral terms of trade? (a) Jacob Viner(b) G.S.Donens (c) Taussig (d) J.S.Mill

……….. trade refers to the trade or exchange of goods and services between two or more countries.(a) Internal (b) External (c) International (d) Domestic

If trade is done on large scale it is called ………. (a) Whole sale trade (b) State trade (c) Central trade (d) World trade

Which of the following is not correctly matched.(a) Intra – regional trade – Internal trade (b) World Bank – IMF (c) Types of Exchange Rate – Fixed exchange rate system (d) Equillibrium Exchange Rate – David Ricardo

The New Export Import policy was implemented in …………. (a) 1990 – 1995 (b) 1991 – 1996 (c) 1992 – 1997 (d) 1993 – 1998

The World Trade organisation is a ………….. (a) Promote of private foreign investment (b) Promoter of International monetary co-operation (c) Lateral trade agreement (d) New trade body to settle trade disputes between nations

Which of the following is not correctly matched.(a) FOREX – Foreign Exchange (b) WTO – World Trade Organisation (c) FDI – Foreign Direct Investment (d) IBRD – india Bank Recruitment Development

Trade between two countries is known as ………. trade (a) External (b) Internal (c) Inter – regional (d) Home

Explain the relationship between Foreign Direct Investment and economic development?

Terms of Trade of a country show ………… (a) Ratio of goods exported and imported (b) Ratio of import duties (c) Ratio of prices of exports and imports(d) Both (a) and (c)

Foreign trade increases worker’s welfare atleast ………ways.(a) Two (b) Three (c) Four (d) Five

The role of WTO is to regulate trade among the nations of the ……… (a) Trade (b) Organisation (c) World (d) Regulation

Foreign trade means ………..(a) Trade between nations of the world (b) Trade among different states (c) Trade among two states (d) Trade with one nation

Which of the following factors influence trade? (a) The stage of development of a product(b) The relative price of factors of productions (c) Government(d) All of the above.

International trade differs from domestic trade because of ……. (a) Trade restrictions (b) Immobility of factors (c) Different government policies (d) All the above

……….. items means the imports and exports of services and other foreign transfer transactions.(a) Invisible (b) Visible(c) Exports (d) Imports

Favourable trade means value of exports are ………. Than that of imports. (a) More (b) Less (c) More or Less (d) Not more than

………….. means value of imports is in excess of the value exports. (a) Balance of Trade (b) Unfavourable balance of trade (c) Favourable balance of trade (d) Export trade

If the value of exports is greater than value of imports then it is known as ………… terms of trade. (a) Unfavourable (b) Favourable (c) Moderate (d) Low

…………….. means imports and exports of commodities. (a) EXIM (b) Visible items (c) Non visible items (d) Foreign exchange