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

Under the new GATT agreements, textile trade related to Multi-Fibre Arrangement (MFA) has to be abolished within

  1. 5 years

  2. 10 years

  3. 15 years

  4. 20 years
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under the new GATT (General Agreement on Tariffs and Trade) agreements, specifically the Uruguay Round, the Multi-Fibre Arrangement (MFA) which governed trade in textiles and clothing was to be phased out over a 10-year period. This transition was completed by 2005, ending the quota system in textile trade.

Multiple choice

When was the quota system in textile's foreign trade abolished?

  1. January 1, 2003

  2. January 1, 2004

  3. January 1, 2005

  4. January 1, 2006
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The quota system in international textile trade was abolished on January 1, 2005, marking the end of the Multi-Fibre Arrangement (MFA). This was a significant milestone in global trade liberalization under the WTO Agreement on Textiles and Clothing (ATC), which phased out quantitative restrictions on textile trade over a 10-year period.

Multiple choice

Largest commercial community in the world is -

  1. NAFTA

  2. ASEM

  3. APEC

  4. ECM
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The European Common Market (ECM) represents the largest commercial community globally, encompassing the European Union's single market. This economic bloc accounts for the largest share of world trade among regional agreements.

Multiple choice

SAFTA is

  1. South Asian Free Trade Area

  2. South Asian Free Trade Authority

  3. South Asian Free Trade Agreement

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

SAFTA stands for South Asian Free Trade Area, a regional agreement among SAARC nations to promote trade liberalization. This agreement aims to create a free trade zone across South Asia, reducing tariffs and trade barriers.

Multiple choice

OPEC controls what percentage of all oil reserves?

  1. 47 %

  2. 57 %

  3. 67 %

  4. 77 %
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

OPEC (Organization of the Petroleum Exporting Countries) controls approximately 77% of the world's total proven oil reserves, giving them significant influence over global oil markets and prices.

Multiple choice

Some developed countries have suggested that in WTO negotiations process of determining 'Special Products' (SPs) should be made more transparent. In WTO terminology what are these special products?

  1. The products which developing countries are allowed to shield from formula tariff cuts.

  2. The products, which are normally imported by the developing countries

  3. Special products are those products which are highly perishable and cannot be preserved for a longer period. (fish, meat, milk, etc.)

  4. Products which are enjoying maximum subsidy by developed countries. Developing countries are not allowed to do that
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In WTO negotiations, Special Products (SPs) refer to products that developing countries are allowed to shield or protect from formula tariff cuts. This special treatment is designed to safeguard food security, rural livelihoods, and farmers' interests in developing nations. Option A correctly defines this WTO terminology. The other options are incorrect - SPs are not about imports, perishability, or subsidies.

Multiple choice

Directions: For this question, select the best of the answer choices given.

The cost of manufacturing sports shoes in Macao is 25% less than the cost of manufacturing them in the Philippines. Even after transportation fees and tariff charges are added, it is still cheaper for a company to import sport shoes from Macao to the Philippines than to manufacture sports shoes in the Philippines. The statements above, if true, best support which of the following assertions?

  1. Labor costs in Macao are 25% below those in the Philippines.

  2. Importing sports shoes from Macao to the Philippines will eliminate 25% of the manufacturing jobs in the Philippines.

  3. The tariff on sports shoes imported from Macao to the Philippines is less than 25% of the cost of manufacturing sports shoes in the Philippines.

  4. The fee for transporting a pair of sports shoes from Macao to the Philippines is more than 25% of cost of manufacturing the shoes in Macao.

  5. It takes 25% less time to manufacture a pair of sports shoes in Macao than it does in the Philippines.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The best answer is (3). If the tariff on importing sport shoes from Macao to the Philippines were as high as 25% or more of the cost of producing sports shoes in the Philippines, then, contrary to what the passage says, the cost of importing sports shoes would be equal to or more than the cost of producing sports shoes in the Philippines. Thus, the tariff cannot be that high.

Multiple choice

Which of the following statements is/are correct about auxiliaries to trade?

a. Activities which are meant for maximisation of profit during trade are known as auxiliaries to trade. b. These activities are generally, referred to as services because these are in the nature of facilitating the activities relating to industry and trade. c. The activities that help in removing various hindrances, which arise in connection with the production and distribution of goods.

  1. Only a

  2. Only b

  3. Only c

  4. Only a and c

  5. Only b and c
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

It is the right answer, as both b and c are correct. These activities are generally referred to as services because these are in the nature of facilitating the activities relating to industry and trade. The activities that help in removing various hindrances, which arise in connection with the production and distribution of goods.

Multiple choice

Commerce plays a vital role in removing various hindrances in exchange of goods and services. By which of the following ways does commerce help in removing the 'hindrances of person?'

  1. Through trade

  2. Through transport

  3. Through insurance

  4. Through banks

  5. Through advertising
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Hindrances of person occurs due to lack of contact and communication between producers and consumers. Commerce removes this hindrance through trade which provides an organised market where buyers and sellers can contact each other.

Multiple choice

The World Trade Organization (WTO) was earlier known as

  1. UNICEF

  2. GATT

  3. UNCTAD

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

The WTO (established 1995) succeeded GATT (General Agreement on Tariffs and Trade), which was created in 1947 to reduce trade barriers through negotiations. GATT was a provisional treaty, while WTO is a permanent organization with dispute settlement authority.