Economics · General Awareness

International Trade Economics

2,124 Questions

International trade economics covers the exchange of goods and services across borders, encompassing theories like comparative advantage and policies such as tariffs. Key concepts include the balance of payments, free trade agreements, and globalization measures. These topics are frequently asked in UPSC, State PSC, and other competitive exams to test economic awareness.

Balance of paymentsTrade policy and tariffsFree trade agreementsComparative advantage theory

International Trade Economics Questions

Multiple choice

Directions: Choose the correct option for the given question.

Which of the following statements is correct in respect of Duty Drawback Scheme?

  1. Relieving export goods of duties paid for components used for manufacturing the export goods.

  2. Providing cash incentives to exporters to compensate the duty paid by them in foreign countries.

  3. Compensating importers to the extent of import duty paid by them for importing life-saving drugs.

  4. Providing a facility for withdrawing the duty paid by exporters, if their exports are rejected in foreign countries.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Duty Drawback Scheme compensates importers for import duties paid on life-saving drugs and essential medicines. This is a specific provision to make critical healthcare products more affordable in India. The scheme is NOT about export goods (A), cash incentives for foreign duties (B), or duty refunds for rejected exports (D) - those are different export promotion schemes.

Multiple choice

The annual record for all the monetary transactions of a country with other countries of the world is known as

  1. Balance of trade

  2. Balance of monetary-receipts

  3. Balance of payments

  4. Balance sheet.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Balance of Payments (BoP) is a comprehensive record of all economic transactions between residents of a country and the rest of the world during a given period. It includes trade balance, services, income transfers, and capital flows. Unlike Balance of Trade which only covers goods, BoP encompasses all monetary transactions including invisible items.

Multiple choice

ECOMARC is a symbol related to

  1. Exported goods

  2. Imported goods

  3. Goods safe for environment

  4. Best quality
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

ECOMARC is an Indian ecolabel certification mark that indicates products are environmentally safe throughout their lifecycle - from production to disposal. It certifies that goods meet specific environmental standards, not their quality or export/import status. The mark helps consumers identify eco-friendly products.

Multiple choice

Directions: Fill the highlighted blank in the following passage by choosing the best option from the ones given below

India (11) slowly getting into FTAs. It signed them with Sri Lanka in 1998 and with Thailand (12) 2003, _(13)_ PTAs with Afghanistan, Chile and MERCOSUR. It has reached on one _(14)_ with ASEAN this month and it has been negotiating one _(15) the European union (16)_ July 2007 as well as one with Japan.

  1. trifle

  2. agreement

  3. far fetched

  4. synergic
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The sentence reads 'It has reached on one (14)_ with ASEAN this month'. The correct answer is 'agreement' (option B) as it completes the meaningful phrase 'reached on one agreement with ASEAN'. 'Agreement' is the only noun that fits the context of trade negotiations and partnerships mentioned throughout the passage.

Multiple choice

The WTO was formed to take over the functions of

  1. GATT

  2. EEU

  3. IMF

  4. ECA
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The World Trade Organization (WTO) was established in 1995 to succeed the General Agreement on Tariffs and Trade (GATT) as the global framework for international trade rules. GATT had been the primary multilateral trade agreement since 1947, and the WTO was created to expand its scope and provide a more robust institutional structure.

Multiple choice

FTA stands for _________.

  1. Fighter Trade Agreement

  2. Free Trade Agreement

  3. Full Trade Agreement

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

FTA stands for Free Trade Agreement, a treaty between two or more countries to reduce barriers to imports and exports. Examples include NAFTA, USMCA, and various bilateral FTAs. It eliminates tariffs and quotas on goods traded between member countries.

Multiple choice

WTO stands for __________.

  1. World Telphone Oraganisation

  2. World Trade Organisation

  3. West Trade Organisation

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

WTO is the World Trade Organisation, a global international organization dealing with rules of trade between nations. Option A contains a typo 'Telphone'.

Multiple choice

The term 'Third World' refers to

  1. under developed countries

  2. developing countries

  3. old producing countries

  4. asian countries
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The term 'Third World' originated during the Cold War to define countries that remained unaligned with either NATO or the Communist Bloc. In modern usage, it is frequently used to describe developing countries with lower levels of industrialization.

Multiple choice

India was recently ranked third for attracting foreign equity fund inflows among global emerging markets - across Asia, Middle East, Latin America, Europe and Africa - during 2004. Which among the following countries was at number one position?

  1. Malaysia

  2. Taiwan

  3. Mexico

  4. Chile
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In 2004, Taiwan attracted the highest amount of foreign equity fund inflows among global emerging markets, followed by South Korea and India. India's third-place ranking was a significant milestone, reflecting growing global investor confidence in the Indian economy. Taiwan's strong technology sector was a major draw for foreign institutional investors (FIIs) during that period.

Multiple choice

In foreign trade policy 2007-08, govt. has revamped the status holder' s scheme for export houses. ' Premier Trading House' has been given to earlier

  1. Two Star Export House

  2. Three Star Export House

  3. Four Star Export House

  4. Five Star Export House
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under the Foreign Trade Policy 2007-08, the government revamped the status holder categories to simplify the export hierarchy. The category previously known as 'Five Star Export House' was renamed to 'Premier Trading House'. This status is awarded based on specific export performance thresholds.

Multiple choice

Which of the following countries was the largest consumer of gold jwellery?

  1. USA

  2. China

  3. Russia

  4. India
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

China has consistently been one of the world's largest consumers of gold jewelry, often alternating the top position with India. Increased wealth and cultural significance of gold in China drive this high demand. While India is also a massive consumer, China's market size has frequently surpassed it in recent years.

Multiple choice

TBT agreement under the WTO stands for

  1. Technical Barriers to Trade

  2. Technical Backward Trade

  3. Team of Backward Traders

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under the World Trade Organization, TBT stands for the Agreement on Technical Barriers to Trade, which ensures that technical regulations and standards do not create unnecessary obstacles to international trade.

Multiple choice

Directions: The last sentence in the following passage has been deleted. Select the sentence, out of the available options, that best suits the end of the passage

At 12 : 01 a.m. on Jan. 1, ships laden with khaki slacks and cashmere sweaters will leave the port of Hong Kong. Their destination will be the Gap, Printemps, Wal-Mart and a slew of other retail stores, eventually ending up in closets from Paris to Peoria. These textile and apparel exports will be the first to head to America and Europe in a brand-new post-quota world, envisioned some 10 years ago when the World Trade Organization ordered that clothing import quotas be abolished by 2005. In theoretical terms, that means that China, Indonesia, Pakistan and other countries that produce textiles and apparel can ship as much as they want to the United States. If companies like the Limited and Banana Republic can buy specific clothing items from the cheapest and most efficient producer, no matter where that producer happens to reside, then American consumers - who have borne part of the cost of protecting the nation's textile industry - should see a sharp reduction in the price of clothing.

  1. South-Asian countries can ship their apparel only to United States.

  2. Limited and Banana Republic Companies can buy clothing from cheap stores all over the world.

  3. The end of textile quotas presents a textbook opportunity to realize the benefits of free trade.

  4. Paris to Peoria would see a new wave of apparels and textile exports from January 1.

  5. The future of trade for the third world is bright indeed.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The ships and the destinations are mentioned only to make a point regarding the scenario in the quota-free world. This confirms (3) to be the answer. 

Multiple choice

Which of the following defines a free-port?

  1. Allows duty-free imports

  2. Does not have any customs checking

  3. Allows free entry to goods from some specified countries

  4. Allows free entry to goods which are to be re-exported
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A free-port is a designated area, typically a port, where goods can be landed, handled, manufactured, or reconfigured and re-exported without the intervention of customs authorities, primarily allowing duty-free imports.