Economics GK Quiz-20

1. Which among the following is not
a non-customs duty obstacle in
the world trade ?
(1) Quantity restriction
(2) Establishment of Standard
of labour in manufacturing
(3) Determination of import duty
uniformly
(4) Restrictions on goods quality
Answer:
1. (3) Non-tariff barriers to trade include import quotas,
special licenses, unreasonable standards for the
quality of goods, bureaucratic delays at customs,
export restrictions, limiting the activities of state
trading, export subsidies, countervailing duties,
technical barriers to trade, sanitary and phyto-sanitary
measures, rules of origin, etc. Determination of import
duty uniformly is comes under the sovereign duty of
a nation. It is internal development.


(SSC Section Officer (Audit)
Exam. year 1997)
2. A seller or buyer protects his
business or holdings from
changing prices and takes
action against it. It is known as–
(1) defence (2)betting
(3) inter-trading (4) mortgage
Answer:
2. (1) It is known as defence. It is a type of resistance
against danger, attack, or harm to business or holding.
A seller or buyer resorts to defence as a means of
protection.


(SSC Section Officer (Audit)
Exam. 14.12.2003)
3. Which unit of valuation is known
as “Paper gold” ?
(1) Eurodollar (2) Petrodollar
(3) SDR (4) GDR
Answer:
3. (3) Paper Gold is a measure of a country’s reserve
assets in the international monetary system. It is also
called Special Drawing Rights (SDR) which is an
international reserve asset, created by the IMF in
1969 to supplement its member countries’ official
reserves. Its value is based on a basket of four key
international currencies, and SDRs can be exchanged
for freely usable currencies. SDRs may actually
represent a potential claim on IMF member countries’
non-gold foreign exchange reserve assets, which are
usually held in those currencies.


(SSC Tax Assistant (Income Tax &
Central Excise) Exam. 05.12.2004)ECONOMICS
SGAE–591
4. A closed economy is one which
(1) Does not trade with other
countries
(2) Does not possess any
means of international
transport
(3) Does not have a coatastal line
(4) Is not a member of the
U.N.O.
Answer:
4. (1) A closed economy is one that has no exports or
imports. An open economy is one that has exports
and imports. In a closed economy, domestic quantity
and domestic price entirely determine producer
surplus and consumer surplus. In a closed economy,
equilibrium price and equilibrium quantity determine
consumer surplus and producer surplus.


(SSC CPO Sub-Inspector
Exam. 26.05.2005)
5. 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
Answer:
5. (3) Balance of payments (BoP) accounts are an
accounting record of all monetary transactions
between a country and the rest of the world. These
transactions include payments for the country’s
exports and imports of goods, services, financial
capital, and financial transfers. The BoP accounts
summarize international transactions for a specific
period, usually a year, and are prepared in a single
currency, typically the domestic currency for the
country concerned.


(SSC Tax Assistant (Income Tax &
Central Excise) Exam. 11.12.2005)
6. A country’s balance of trade is
unfavourable when —
(1) exports exceed imports
(2) imports exceed exports
(3) terms of trade become unfavourable
(4) None of these
Answer:
6. (2) The balance of trade, or net exports is the
difference between the monetary value of exports
and imports of output in an economy over a certain
period. It is the relationship between a nation’s
imports and exports. A positive balance is known as
a trade surplus if it consists of exporting more than
is imported; a negative balance is referred to as a
trade deficit or, informally, a trade gap.


(SSC Statistical Investigators
Grade–IV Exam. 13.08.2006)
7. Scheduled Banks have to be registered with
(1) SEBI (2) RBI
(3) Finance Ministry
(4) SBI
Answer:
7. (2) The scheduled primary (urban) cooperative banks
are required to maintain with the Reserve Bank of
India an average daily balance, the amount of which
should not be less than 5 per cent of their net demand
and time liabilities in India in terms of Section 42 of
the Reserve Bank of India Act, 1934. Non-scheduled
(urban) cooperative banks, under the provision of
Section 18 of Banking Regulation Act, 1949 (As
Applicable to Cooperative Societies) should maintain
a sum equivalent to at least 3 per cent of their total
demand and time liabilities in India on day-to-day
basis.


(SSC CPO Sub-Inspector
Exam. 03.09.2006)
8. The difference between visible
exports and visible imports is
defined as
(1) Balance of trade
(2) Balance of payment
(3) Balanced terms of trade
(4) Gains from trade
Answer:
8. (1) The balance of trade (or net exports, sometimes
symbolized as NX) is the difference between the
monetary value of exports and imports of output in
an economy over a certain period. It is the relationship
between a nation’s imports and exports.


(SSC Tax Assistant (Income Tax &
Central Excise Exam. 12.11.2006)
9. Free Trade refers to
(1) free movement of goods
from one country to another
(2) movement of goods free of
cost
(3) unrestricted exchange of
goods and service
(4) trade free of duty
Answer:
9. (1) Free trade is a policy by which a government does
not discriminate against imports or interfere with
exports by applying tariffs (to imports) or subsidies
(to exports) or quotas. According to the law of
comparative advantage, the policy permits trading
partners mutual gains from trade of goods and
services. Under a free trade policy, prices emerge
from supply and demand, and are the sole
determinant of resource allocation. ‘Free’ trade differs
from other forms of trade policy where the allocation
of goods and services among trading countries are
determined by price strategies that may differ from
those that would emerge under deregulation.


(SSC Tax Assistant (Income Tax &
Central Excise) Exam. 25.11.2007)
10. With which form of economy is
the term ‘Laissez-faire’ associated ?
(1) Capitalist economy
(2) Socialist economy
(3) Mixed economy
(4) Command economy
Answer:
10. (1) In economics, laissez-faire means allowing industry
to be free of state intervention, especially restrictions
in the form of tariffs and government monopolies.
The growth of industry in England in the early 19th
century and American industrial growth in the late
19th century both occurred in a laissez-faire capitalist
environment. The laissez-faire period ended by the
beginning of the 20th century, when large monopolies
were broken up and government regulation of
business became the norm.


(SSC Tax Assistant (Income Tax &
Central Excise) Exam. 25.11.2007)
11. How far does the Exclusive Economic Zone of a country extend
from her coast?
(1) 120 km (2) 220 km
(3) 320 km (4) 420 km
Answer:
11. (*) The concept of the exclusive economic zone is one
of the most important pillars of the 1982 ConventionECONOMICS
SGAE–643
on the Law of the Sea. It establishes the principle of a
200-nautical-mile limit on a nation’s exclusive economic
zone (EEZ) whereby a nation controls the undersea
resources, primarily fishing and seabed mining, for a
distance of 200 nautical miles from its shore. In colloquial
usage, the term may include the territorial sea and
even the continental shelf beyond the 200-mile limit.
Generally, a state’s EEZ extends to a distance of 200
nautical miles (370 km) out from its coastal baseline.
The exception to this rule occurs when EEZs would
overlap; that is, state coastal baselines are less than
400 nautical miles (740 km) apart.


(SSC Section Officer (Audit)
Exam. 06.01.2008)
12. A favourable Balance of Trade
of a country implies that
(1) Imports are greater than
Exports
(2) Exports are greater than
Imports
(3) Both Imports and Exports
are equal
(4) Rising Imports and Falling
Exports
Answer:
12. (2) Favorable balance of trade is an imbalance in a
nation’s balance of trade in which the payments for
merchandise exports received by the country exceed
payments for merchandise imports paid by the
country. This is also termed a balance of trade surplus.
It’s considered favorable because more goods are
exported out of the country than are imported in,
meaning that foreign production is replaced with
domestic production, which then increases domestic
employment and income. A balance of trade surplus
is often the source of a balance of payments surplus.


(FCI Assistant Grade-II
Exam. 22.01.2012 (Paper-1)
13. ‘Quota’ is
(1) tax levied on imports
(2) imports of capital goods
(3) limit on the quantity of imports
(4) limit on the quantity of
exports
Answer:
13. (3) An import quota is a limit on the quantity of a good
that can be produced abroad and sold domestically.
It is a type of protectionist trade restriction that sets
a physical limit on the quantity of a good that can be
imported into a country in a given period of time.
The primary goal of import quotas is to reduce imports
and increase domestic production of a good, service,
or activity, thus "protect" domestic production by
restricting foreign competition.


(SSC Combined Matric Level
(PRE) Exam. 21.05.2000
(Ist Sitting) (Middle Zone)
14. ‘PROTECTION’ means
(1) Restrictions imposed on
import trade
(2) Protection to home industries
(3) No free exchange of goods
and services between two
countries
(4) All of the above
Answer:
14. (4) Protectionism is the economic policy of restraining
trade between states through methods such as tariffs
on imported goods, restrictive quotas, and a variety
of other government regulations designed to allow
(according to proponents) "fair competition" between
imports and goods and services produced
domestically. It refers to policies or doctrines which
protect businesses and workers within a country by
restricting or regulating trade with foreign nations.


(SSC Combined Matric Level (PRE)
Exam. 13.05.2001 (Ist Sitting)
15. Which one of the following does
not deal with export promotion?
(1) Trade Development Authority
(2) Mineral and Metal Trading
Corporation
(3) Cooperative Marketing Societies
(4) State Trading Corporation of
India
Answer:
15. (3) Cooperative marketing is just an extension and
application of the philosophy of cooperation in the
area of agricultural marketing. It is a process of
marketing through a cooperative society, formed for
the producers, by the producers. It seeks to eliminate
the middlemen between the producer and the
consumer, thus getting the maximum price for their
produce.


(SSC Combined Matric Level (PRE)
Exam. 05.05.2002 (IInd Sitting)
(Eastern Zone, Guwahati)
16. Theoretically trade between two
countries lakes place on account of
(1) differences in costs
(2) scarcity of goods
(3) comparative differences in
costs
(4) need for exports
Answer:
16. (3) Trade exists for man due to specialization and
division of labor, most people concentrate on a small
aspect of production, trading for other products.
Trade exists between regions because different
regions have a comparative advantage in the
production of some tradable commodity, or because
different regions' size allows for the benefits of mass
production thus providing cost advantage of producing
the same commodity.


(SSC Combined Matric Level (PRE)
Exam. 05.05.2002 (IInd Sitting)
(Eastern Zone, Guwahati)
17. Short term loans to correct Balance of Payments problems is
given by
(1) I.M.F. (2) I.B.R.D
(3) I.D.A (4) A.D.B
Answer:
17. (1) Upon initial IMF formation, its two primary
functions were: to oversee the fixed exchange rate
arrangements between countries, thus helping
national governments manage their exchange rates
and allowing these governments to prioritize economic
growth, and to provide short-term capital to aid
balance-of-payments.


(SSC Combined Matric Level (PRE)
Exam. 05.05.2002 (Ist Sitting)
(North Zone, Delhi)
18. Multinational Corporation is also
called
(1) Trading Corporation
(2) International Corporation
(3) Finance Corporation
(4) Trans-national Corporation
Answer:
18. (4) A Multinational corporation, also known as Transnational Corporation or International corporation, is
a corporation that is registered in more than one
country or that has operations in more than one
country. It is a large corporation which both produces
and sells goods or services in various countries. They
play an important role in globalization.


(SSC Combined Matric Level (PRE)
Exam. 12.05.2002 (Ist Sitting)
19. Freeing the economy from all
unnecessary controls and regulations is referred to as
(1) Freedom
(2) Privatisation
(3) Liberalisation
(4) Globalisation
Answer:
19. (3) Economic liberalization is a very broad term that
usually refers to fewer government regulations and
restrictions in the economy in exchange for greater
participation of private entities; the doctrine is
associated with classical liberalism. The arguments
for economic liberalization include greater efficiency
and effectiveness that would translate to a "bigger
pie" for everybody. Thus, liberalization in short refers
to "the removal of controls", to encourage economic
development.


(SSC Combined Matric Level (PRE)
Exam. 16.06.2002 (Re-Exam)
20. Floating Exchange Rate is also
referred to as
(1) Flexible Exchange Rate
(2) Fixed Exchange Rate
(3) Real Exchange Rate
(4) Controlled Exchange Rate
Answer:
20. (1) A floating exchange rate or fluctuating exchange
rate is a type of exchange rate regime wherein a
currency's value is allowed to fluctuate according to
the foreign exchange market. In this sense, it is quite
flexible and not something fixed or constant. Such
rates automatically adjust, enabling a country to
dampen the impact of shocks and foreign business
cycles, and to preempt the possibility of having a
balance of payments crisis.


(SSC Combined Matric Level (PRE)
Exam. 16.06.2002 (Re-Exam)
21. Countries that depend mainly
on the export of primary products
for their income, are prone to
(1) inflation
(2) economic instability
(3) increasing unemployment
(4) stable economic growth
Answer:
21. (3) Most of the world's poorest countries depend for
increasing export earnings on agricultural products
that are vulnerable to fluctuating or declining terms
of trade. Disadvantageous terms of technology
transfer, protectionism, and decline in financial flows
compound the already existing poverty and lack of
work. Being labour-intensive, such sectors are prone
to various types of unemployment. Developing
countries that rely on the export of primary products
were hit particularly hard by falling commodity prices
between 1980 and 1984.


(SSC Combined Matric Level (PRE)
Exam. 30.07.2006 (IInd Sitting)
(Central Zone)
22. A Trade Policy consists of
(1) Export-Import Policy
(2) Licencing Policy
(3) Foreign Exchange Policy
(4) Balance of Payment Policy
Answer:
22. (1) Trade policy, also called Export-Import policy, is
a collection of rules and regulations which pertain to
trade. Every nation has some form of trade policy in
place, with public officials formulating the policy which
they think would be most appropriate for their
country. Things like import and export taxes, tariffs,
inspection regulations, and quotas can all be part of
a nation's trade policy.


(SSC Combined Matric Level (PRE)
Exam. 30.03.2008 (Ist Sitting)ECONOMICS
SGAE–592
23. Globalisation means
(1) Integration of economy
(2) Integration of financial market
(3) Integration of the domestic
economy with the world
economy
(4) Integration of the various
sectors of economy
Answer:
23. (3) Globalization is the process of international
integration arising from the interchange of world
views, products, ideas, and other aspects of culture.
Put in simple terms, globalization refers to processes
that promote world-wide exchanges of national and
cultural resources.


(SSC (10+2) Level Data Entry
Operator & LCD Exam. 11.12.2011
(Ist Sitting (Delhi Zone)
24. Globalisation means
(1) Integration of economy
(2) Integration of financial market
(3) Integration of the domestic
economy with the world
economy
(4) Integration of the various
sectors of economy
Answer:
24. (3) Globalization is the increasing economic
interdependence of national economies across the
world through a rapid increase in cross-border
movement of goods, service, technology, and capital.
It has been largely accounted by developed
economies integrating with less developed economies,
by means of foreign direct investment, the reduction
of trade barriers, and in many cases cross border
immigration.


(SSC (10+2) Level Data Entry
Operator & LCD Exam. 11.12.2011
(Ist Sitting (East Zone)
25. Externality theory is the basic
theory of the following branch of
Economics:
(1) Environomics
(2) Fiscal Economics
(3) International Economics
(4) Macro Economics
Answer:
25. (1) In economics, an externality is a cost or benefit
which results from an activity or transaction and which
affects an otherwise uninvolved party who did not
choose to incur that cost or benefit. Environmental
pollution is a classic case of an externality. Externality
theory forms the basic theory of environmental
economics.


(SSC Graduate Level Tier-I
Exam. 21.04.2013)
26. The balance of payments of a
country is in equilibrium when
the
(1) demand as well as supply
of the domestic currency
are the highest
(2) demand for the domestic currency is equal to its supply
(3) demand for the domestic currency is the highest
(4) demand for the domestic currency is the lowest
Answer:
26. (2) When the balance of payments (BOP) of a country
is in equilibrium, the surplus or deficit is eliminated
from the BOP. When the BOP of a country is in
equilibrium, the demand for domestic currency is equal
to its supply. The demand and supply situation is
thus neither favourable nor unfavourable.


(SSC Graduate Level Tier-I
Exam. 19.05.2013)
27. “Closed Economy” means:
(1) no provision for public sector
(2) no provision for private sector
(3) economy policy not well defined
(4) a country having no imports
and exports
Answer:
27. (4) Closed economy is an economy in which no activity
is conducted with outside economies. A closed
economy is self-sufficient, meaning that no imports
are brought in and no exports are sent out. The goal
is to provide consumers with everything that they
need from within the economy's borders.


(SSC CAPFs SI & CISF ASI
Exam. 23.06.2013)
28. Dumping is a form of price discrimination at
(1) within industry
(2) national level
(3) international level
(4) local level
Answer:
28. (3) Dumping is, in general, is a situation of international
price discrimination, where the price of a product
when sold in the importing country is less than the
price of that product in the market of the exporting
country. It is regarded as an “unfair” trade practice
as it may cause or threaten to cause material injury
to the importing markets.


(SSC (10+2) Level Data Entry
Operator & LDC Exam. 20.10.2013)
29. In the balance of payments account, unrequited receipts and
payments are also regarded as
(1) bilateral transfers
(2) unilateral transfers
(3) capital account transfers
(4) invisible transfers
Answer:
29. (2) Unrequited receipts and payments are also regarded as unilateral transfers as the flow is only in
one direction with no automatic reverse flow in the
other direction. There is no repayment obligation attached to these transfers because they are neither
borrowings nor lending, but gifts and grants exchanged between governments and people in the
world.


(SSC CAPFs SI, CISF ASI & Delhi
Police SI Exam. 22.06.2014)
30. “Wall Street” is the name of the :
(1) Stock Exchange of New
York
(2) Indian Township in Washington
(3) Super market in Mumbai
(4) Stock Exchange of kolkata
Answer:
30. (1) Wall Street, a 1.1 km street in the Financial District of lower Manhattan, New York City, is home to
the world’s two largest stock exchanges by total market capitalization, the New York Stock Exchange and
NASDAQ. Over time, the term has become a metonym
for the financial markets of the United States as a
whole, the American financial sector.


(SSC CGL Tier-I Exam, 16.08.2015
(IInd Sitting) TF No. 2176783)
31. As a result of higher rate of inflation in India, the U.S. dollar
will
(1) Depreciate (2) Constant
(3) Negligible (4) Appreciate
Answer:
31. (4) A relatively higher rate of inflation causing rise in
prices of the goods in India as compared to those in
the USA will make US goods relatively cheaper and
the Indian goods expensive. This will lead to rise in
imports of US goods into India and the reduction in
Indian exports to the USA that will, in turn, cause the
foreign exchange rate of dollar in terms of rupees to
rise and the price of Indian rupee in terms of dollar
will fall. Thus, as a result of higher rate of inflation in
India, the US dollar -will appreciate and the Indian
rupee will depreciate.


(SSC CHSL (10+2) LDC, DEO
& PA/SA Exam, 20.12.2015
(Ist Sitting) TF No. 9692918)
32. Which type of foreign investment
is considered as unsafe?
(1) Foreign Direct Investment
(FDI)
(2) Portfolio Investment
(3) NRI deposits
(4) External commercial borrowing
Answer:
32. (2) Portfolio Investments are considered unsafe. These
are investments in the form of a group (portfolio) of
assets, including transactions in equity securities,
such as common stock, and debt securities, such as
banknotes, bonds, and debentures. Portfolio investments are passive investments, as they do not entail
active management or control of the issuing company. Rather, the purpose of the investment is solely
financial gain, in contrast to foreign direct investment
(FDI), which allows an investor to exercise a certain
degree of managerial control over a company.


(SSC CGL Tier-I (CBE) Exam.
09.09.2016 (IInd Sitting))
33. The term ‘Dumping’ refers to
(1) The sale of a sub-standard
commodity
(2) Sale in a foreign market of a
commodity at a price below
marginal cost
(3) Sale in a foreign market of a
commodity just at marginal
cost with too much of profit
(4) Smuggling of goods without
paying any customs duty
Answer:
33. (2) Dumping is an international price discrimination
in which an exporter firm sells a portion of its output in a foreign market at a very low price and the
remaining output at a high price in the home market. This is done to turn out foreign competitors from
the domestic market. If the foreign market is perfectly competitive, the firm may lower the price in
comparison with other competitors so that the demand for it may increase. In such a situation, the
firm may sell the commodity even below marginal
cost of production, incurring loss in the foreign market (International Economics by M. Maria John
Kennedy, p.122).


(SSC CGL Tier-I (CBE) Exam.
10.09.2016 (IInd Sitting))
34. “Globalisation of Indian
Economy” denotes :
(1) Increase of external borrowings
(2) having minimum intervention
in economic relations with
other countries
(3) starting of new business
units abroad
(4) relaxing the programmes of
import substitution
Answer:
34. (2) Globalization means integrating the economy of a
country with the economies of other countries or world
economy under conditions of free flow of trade, capital and movement of persons across borders. In the
Indian content, this implies opening up the economy
to foreign direct investment by providing facilities to
foreign companies to invest in different fields of economic activity in India; removing constraints and obstacles to the entry of MNCs in India allowing Indian
companies to enter into foreign collaborations in India and also encouraging them to set up joint ventures abroad; carrying out massive import liberalization programmes by switching over from quantitative
restrictions to tariffs in the first place and then bringing down the level of import duties considerably; and
instead of a plethora of export incentives opting for
exchange rate adjustments for promoting exports.

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