CA Foundation Economics – Instruments of Trade Policy Multiple Choice Questions

The Instruments of Trade Policy Introduction

Question 1. Which of the following is an example of a tariff as an instrument of trade policy?

1. Government subsidies to promote exports.
2. Imposing a limit on the quantity of imports.
3. Placing a tax on imported goods.
4. Establishing preferential trade agreements with partner countries.

Answer: 3. Placing a tax on imported goods.

Explanation:

Tariffs are taxes imposed on imported goods when they enter a country. They are used as an instrument of trade policy to make imported goods relatively more expensive compared to domestically produced goods, protecting domestic industries. .

Question 2. The purpose of imposing import quotas as an instrument of trade policy is to

1. Generate revenue for the government.
2. Reduce the trade deficit and promote exports.
3. Encourage competition among domestic producers.
4. Restrict the quantity of imports entering the country.

Answer: 4. Restrict the quantity of imports entering the country.

Explanation:

Import quotas are used as an instrument of trade policy to restrict the quantity of. imports entering a country. By limiting the amount of foreign goods that can be imported, quotas aim to protect domestic industries and preserve jobs.

Question 3. Which of the following is an example of a non-tariff barrier to trade?

1. Import quotas.
2. Export subsidies.
3. Free trade agreements.
4. Preferential trade arrangements.

Answer: 1. Import quotas.

Explanation:

Import quotas are a non-tariff barrier to trade. They limit the number of imports that can enter a country, effectively restricting trade and protecting domestic industries.

Question 4. An export subsidy is an instrument of trade policy that

1. Reduces the cost of imported goods for consumers.
2. Provides financial incentives to domestic producers for exporting.
3. Limits the quantity of goods that can be exported.
4. Reduces taxes on imported goods to promote exports.

Answer: 2. Provides financial incentives to domestic producers for exporting.

Explanation:

An export subsidy is a financial incentive provided by the government to domestic producers to encourage them to export their goods. It aims to make exported goods more competitive in international markets by offsetting production and transportation costs.

Question 5. Which of the following trade policy instruments is aimed at promoting free trade and reducing barriers to international commerce?

1. Export subsidies.
2. Import quotas.
3. Preferential trade agreements.
4. Dumping duties.

Answer: 3. Preferential trade agreements.

Explanation:

Preferential trade agreements are aimed at promoting free trade between specific partner countries by reducing or eliminating tariffs and other trade barriers on certain goods. They facilitate closer economic integration and cooperation among member countries.

Question 6. Tariffs are a form of trade policy that involves

1. Providing subsidies to domestic industries to promote exports.
2. Placing a tax on imported goods to raise their prices.
3. Setting a maximum limit on the number of imports allowed.
4. Facilitating the free flow of goods sent across borders.

Answer: 2. Placing a tax on imported goods to raise their prices.

Explanation:

Tariffs are taxes imposed by the government on imported goods. The purpose of tariffs is to raise the prices of imported goods, making them less competitive in the domestic market compared to locally produced goods.

Question 7. Quotas are a trade policy instrument that involves

1. Providing financial assistance to domestic exporters.
2. Imposing a tax on exports to discourage foreign buyers.
3. Setting a maximum limit on the number of imports allowed.
4. Removing all restrictions on the quantity of imports.

Answer: 3. Setting a maximum limit on the quantity of imports allowed.

Explanation:

Quotas are restrictions imposed by the government on the quantity of specific goods that can be imported. This limit is usually expressed in physical units

For example:  Tons, units, or as a percentage of the domestic market demand.

Question 8. Export subsidies are a trade policy tool that is intended to

1. Encourage domestic consumption of imported goods.
2. Raise revenue for the government from foreign buyers.
3. Discourage domestic production and protect local industries.
4. Provide financial assistance to domestic exporters.

Answer: 4. Provide financial assistance to domestic exporters.

Explanation:

Export subsidies are financial incentives given by the government to domestic exporters to promote the sale of their goods and services in foreign markets. These subsidies can take the form of direct
payments, tax breaks, or grants.

Question 9. Voluntary Export Restraints (VERs) are a trade policy measure in which

1. Governments impose restrictions on the number of imports from specific countries.
2. Exporting countries voluntarily limit the quantity of their exports to a foreign country.
3. Domestic industries impose tariffs on imported inputs to protect local suppliers.
4. Governments impose quotas on both imports and exports to maintain trade balance.

Answer: 2. Exporting countries voluntarily limit the quantity of their exports to a foreign country.

Explanation: 

Voluntary Export Restraints (VERs) occur when exporting countries voluntarily limit the quantity of their exports to a specific foreign country, usually in response to trade negotiations or pressure
from the importing country.

Question 10. Dumping is a trade policy practice where a foreign company

1. Sells goods in the domestic market at prices lower than the production cost
2. Imports goods in large quantities to gain a competitive advantage.
3. Reduces the quality of exported goods to increase profits.
4. Colludes with domestic producers to control prices in the market.

Answer: 1. Sells goods in the domestic market at prices lower than the production cost.

Explanation:

Dumping is a trade policy practice where a foreign company sells goods in the domestic market of another country at prices that are below the production cost or the price in the exporting country. This practice can be considered unfair and can harm domestic industries.

Question 11. Trade policy refers to the government’s strategies and actions aimed at

1. Promoting domestic production and exports
2. Encouraging foreign direct investment
3. Reducing unemployment rates
4. Regulating the stock market

Answer: 1. Promoting domestic production and exports

Question 12. The main objectives of trade policy include

1. Stabilizing foreign exchange rates
2. Controlling inflation and interest rates
3. Protecting domestic industries and promoting international trade
4. Enforcing copyright laws for intellectual property protection

Answer: 3. Protecting domestic industries and promoting international trade

Question 13. Trado policy InalrumonUi can bo clnnnlflod Info two broad cut Gordon

1. Fiscal policy and monetary policy
2. Exchange ralo policies and fiscal policies
3. Trade liberalization and trado protocol on measures
4. Government expenditure and taxation policies

Answer:  3 Trade liberalization and trado protocol on measures.

Question 14. Which trade policy approach aims to reduce or eliminate trade barriers and restrictions to promote free and open international trade?

1. Trade liberalization
2. Import quotas
3. Export subsidies
4. Dumping

Answer: 1. Trade liberalization

Question 15. The imposition of tariffs, import quotas, and export subsidies are examples of:

1. Trade liberalization measures
2. Free trado agreements
3. Trade protection measures
4. Monetary policies

Answer: 3. Trade protection measures

Tariffs

Question 1. What are tariffs in the context of trade policy?

1. Subsidies provided to domestic industries for exports.
2. Restrictions on the import of certain goods to protect domestic industries.
3. Trade agreements between countries to promote free trade.
4. Financial incentives are offered to foreign companies to invest in the domestic market.

Answer: 2. Restrictions on the import of certain goods to protect domestic industries.

Explanation:

Tariffs are taxes or duties imposed on imported goods, making them more expensive for domestic consumers and businesses. The purpose of tariffs is to restrict the import of certain goods and protect domestic industries from foreign competition.

Question 2. The main objective of implementing tariffs is to

1. Encourage free trade and promote global economic integration.
2. Increase government revenue through import taxes.
3. Improve the efficiency of domestic industries.
4. Limit the export of certain goods to other countries.

Answer: 2. Increase government revenue through import taxes.

Explanation:

One of the main objectives of implementing tariffs is to increase government revenue through import taxes. Tariffs are a source of income for the government, as they impose taxes on imported goods entering the country.

Question 3. Ad valorem tariffs are calculated based on

1. The quantity of imported goods.
2. The weight of imported goods.
3. The value or price of imported goods.
4. The environmental impact of imported goods.

Answer: 3. The value or price of imported goods.

Explanation:

Ad valorem tariffs are calculated based on the value or price of imported goods. They are usually expressed as a percentage of the good’s value.

Question 4. Specific tariffs are calculated based on

1. The quantity of imported goods.
2. The weight of imported goods.
3. The value or price of imported goods.
4. The environmental impact of imported goods.

Answer: 1. The weight of imported goods.

Explanation:

Specific tariffs are calculated based on the weight of imported goods. They are usually expressed as a fixed amount per unit of weight.

Question 5. The imposition of tariffs can lead to

1. Lower consumer prices for imported goods
2. Increased domestic consumption of imported goods
3. A decrease in domestic production and employment in import-competing industries.
4. Enhanced global economic integration and international cooperation.

Answer: 3. A decrease in domestic production and employment in import-competing industries.

Explanation:

The imposition of tariffs can lead to a decrease in domestic production and employment in import-competing industries. When tariffs make imported goods more expensive, domestic consumers may shift their preferences towards cheaper imported goods, causing a decline in demand for domestic products.

As an Al language model, I don’t have access to a specific database of MCQs with Explanations. However, I can provide you with some sample multiple-choice questions related to tariffs as instruments of trade policy, along with explanations

Question 6. A tariff is a

1. Payment made by the government to domestic producers to boost exports.
2. Tax levied on imports, increasing their cost to the importing country.
3. The subsidy provided by the government to foreign producers to promote imports.
4. Price control mechanism used to stabilize domestic market prices.

Answer: 2. Tax levied on imports, increasing their cost to the importing country.

Explanation:

A tariff is a tax imposed by the government on imported goods. It increases the cost of imports, making them more expensive to the importing country and providing a competitive advantage to domestic producers.

Question 7. The primary purpose of imposing tariffs is to

1. Encourage international cooperation and free trade.
2. Increase government revenue through import taxes.
3. Promote fair competition and protect domestic industries.
4. Discourage domestic consumption of certain goods.

Answer: 3. Promote fair competition and protect domestic industries.

Explanation:

The primary purpose of imposing tariffs is to protect domestic industries from foreign competition and promote fair competition. By imposing tariffs on imports, the government makes foreign goods more expensive, giving domestic producers a competitive advantage in the domestic market.

Question 8. Specific tariffs are levied as a

1. Fixed amount per unit of imported goods.
2. Percentage of the value of imported goods.
3. Payment made by the exporting country to the importing country.
4. The subsidy is provided by the exporting country to domestic producers.

Answer: 1. Fixed amount per unit of imported goods

Explanation:

Specific tariffs are levied as a fixed amount per unit of imported goods. For example, a specific tariff of $10 per unit would impose an additional $10 tax on each unit of the imported goods, regardless of its value.

Question 9. Ad valorem tariffs are levied as a

1. Fixed amount per unit of imported goods.
2. Percentage of the value of imported goods.
3. Payment made by the exporting country to the importing country.
4. The subsidy is provided by the exporting country to domestic producers.

Answer: 2. Percentage of the value of imported goods.

Explanation:

Ad valorem tariffs are levied as a percentage of the value of imported goods. For example, an ad valorem tariff of 10% would impose an additional 10% tax on the value of the imported goods.

Question 10. Which of the following is a potential negative consequence of imposing tariffs?

1. Encouraging domestic industries to become more competitive and efficient.
2. Increasing government revenue through import taxes.
3. Raising the cost of living for consumers due to higher prices of imported goods. .
4. Promoting international cooperation and free trade.

Answer: 3. Raising the cost of living for consumers due to higher prices on imported goods.

Explanation:

One of the potential negative consequences of imposing tariffs is that it raises the cost of living for consumers in the importing country. Higher tariffs lead to higher prices on imported goods, which can result in increased costs for consumers.

Question 11. Tariffs are a form of

1. Government subsidies to domestic industries
2. Trade liberalization
3. Trade protection
4. Foreign direct investment

Answer: 3. Trade protection

Question 12. Tariffs are taxes imposed on

1. Domestic goods and services
2. Imports and exports
3. Foreign direct investment
4. Government expenditures

Answer: 2. Imports and exports

Question 13. The primary purpose of imposing tariffs is to

1. Encourage exports and foreign investment
2. Stimulate economic growth and job creation
3. Generate government revenue and protect domestic industries
4. Facilitate free trade and reduce trade barriers

Answer: 3. Generate government revenue and protect domestic industries

Question 14. A specific tariff is levied as a fixed amount per

1. Unit of imported goods
2. Unit of exported goods
3. Unit of domestic production
4. Unit of foreign investment

Answer: 1. Unit of imported goods

Question 15. An ad valorem tariff is levied as a percentage of the

1. Value of imported goods
2. Value of domestic production
3. Value of foreign investment
4. Value of government revenue

Answer: 1. Value of imported goods

Forms Of Import Tariffs

Question 1. Ad valorem tariffs are expressed as a percentage of the

1. Importing country’s GDP.
2. Value of the imported goods.
3. Number of units of the imported goods.
4. Exporting country’s currency value.

Answer: 2. Value of the imported goods.

Explanation:

Ad valorem tariffs are expressed as a percentage of the value of the imported goods. For example, if the ad valorem tariff rate is 10%, it means that the tariff amount will be 10% of the value of the
imported goods.

Question 2. Specific tariffs are imposed as a fixed amount per

1. Unit of the imported goods.
2. Unit of the exporting country’s currency.
3. Unit of the importing country’s GDP.
4. Unit of the exporting country’s GDP.

Answer: 1. Unit of the imported goods.

Explanation:

Specific tariffs are imposed as a fixed amount per unit of imported goods. For example, if the specific tariff is $5 per unit, it means that the tariff amount will be $5 for each unit of the imported goods.

Question 3. Compound tariffs are a combination of

1. Specific tariffs and import quotas
2. Ad valorem tariffs and export subsidies.
3. Ad valorem tariffs and specific tariffs.
4. Import quotas and export quotas.

Answer: 3. Ad valorem tariffs and specific tariffs.

Explanation:

Compound tariffs are a combination of ad valorem tariffs and specific tariffs. The tariff rate may include both a percentage of the value of the imported goods (ad valorem) and a fixed amount per unit of the imported goods (specifi(c).

Question 4. Which of the following is an example of a revenue tariff?

1. A tariff is imposed to protect domestic industries from foreign competition.
2. A tariff is imposed to discourage the consumption of specific goods.
3. A tariff is imposed to generate government revenue from imports
4. A tariff imposed by an exporting country on its goods.

Answer: 3. A tariff is imposed to generate government revenue from imports.

Explanation:

A revenue tariff is a tariff imposed by the government on imports with the primary purpose of generating government revenue. It is not specifically aimed at protecting domestic industries or discouraging the consumption of specific goods.

Question 5. Which type of import tariff involves reducing the tariff rate as the volume of imports increases?

1. Compound tariff
2. Specific tariff
3. Ad valorem tariff
4. Sliding-scale tariff

Answer: 4. Sliding-scale tariff.

Explanation:

A sliding-scale tariff involves reducing the tariff rate as the volume of imports increases. It is a form of ad valorem tariff that adjusts the tariff rate based on the quantity or value of imports.

Question 6. What is a specific tariff?

1. A tax levied on imports that is calculated as a percentage of the value of the imported goods.
2. A tax levied on exports by the exporting country
3. A tax levied on imports that is a fixed amount per unit of the imported goods.
4. A tax levied on the income of domestic producers.

Answer: 3. A tax levied on imports that is a fixed amount per unit of the imported goods.

Explanation:

A specific tariff is a type of import tariff that is imposed as a fixed amount per unit of imported goods. It is not dependent on the value of the goods but is a specific amount charged for each unit imported. For example, if the specific tariff rate is $5 per unit, then $5 will be levied on each unit of the imported goods, regardless of their value.

This is in contrast to an ad valorem tariff, which is calculated as a percentage of the value of the imported goods. Specific tariffs are used by governments to generate revenue and protect domestic industries from foreign competition.

Question 7. A specific tariff is a type of import tariff that is imposed as a

1. Fixed amount per unit of the exported goods.
2. Fixed amount per unit of the imported goods.
3. Percentage of the value of the exported goods.
4. Percentage of the value of the imported goods.

Answer: 2.  Fixed amount per unit of the imported goods.

Explanation:

A specific tariff is a type of import tariff that is imposed as a fixed t amount per unit of imported goods. This means that for each unit of the imported product, a specific amount of tariff is charged, regardless of the value of the goods.

For example: If the specific tariff is $5 per unit and a country imports 100 units of a particular good, the total tariff payable will be $5 x 100 units = $500.

Question 8. A specific tariff is a type of import tariff that is

1. Imposed as a fixed amount per unit of the imported goods.
2. Expressed as a percentage of the value of the exported goods.
3. A payment made by the importing country to the exporting country.
4. Applied to all goods uniformly, regardless of their origin.

Answer: 1. Imposed as a fixed amount per unit of the imported goods.

Explanation:

A specific tariff is a type of import tariff that is imposed as a fixed amount per unit of imported goods. It means that a predetermined amount of money is charged on each unit of the imported
goods, irrespective of its value. Specific tariffs do not depend on the price of the imported goods but rather on the quantity or number of units imported.

For example: If a country imposes a specific tariff of $5 per unit on imported shoes, every pair of shoes imported into the country will be subject to a $5 tariff, regardless of the shoes’ retail price
or brand.

Question 9. An ad valorem tariff is a type of import tariff that is

1. Imposed as a fixed amount per unit of the imported goods.
2. Expressed as a percentage of the value of the imported goods.
3. A payment made by the exporting country to the importing country.
4. Applied to all goods uniformly, regardless of their origin.

Answer: 2. Expressed as a percentage of the value of the imported goods.

Explanation:

An ad valorem tariff is a type of import tariff that is expressed as a percentage of the value of the imported goods. It means that a certain percentage of the value of each unit of the imported goods is charged as a tariff when they enter the importing country.

For example:

If a country imposes an ad valorem tariff of 10% on imported cars, it means that 10% of the value of each car imported will be charged as a tariff. If the value of an imported car is $20,000, the ad valorem tariff would be $2,000 (10% of $20,000). Ad valorem tariffs are different from specific tariffs, which are imposed as a fixed amount per unit of imported goods, regardless of their value.

Effects Of Tariffs

Question 1. What is the effect of tariffs on domestic producers?

1. Encourages competition
2. Decreases efficiency
3. Increases efficiency
4. None of the above

Answer: Increases efficiency

Explanation:

Tariffs increase the price of imported goods, making domestic products more competitive. This can lead to an increase in demand for domestic products, which in turn can increase efficiency and
productivity of domestic producers.

Question 2. What is the effect of tariffs on consumers?

1. Decreases the price of imported goods
2. Increases the price of imported goods
3. Does not affect the price of imported goods
4. None of the above

Answer: 2. Increases the price of imported goods

Explanation:

Tariffs increase the price of imported goods, making them more expensive for consumers to purchase. This can lead to a decrease in demand for imported goods and an increase in demand for domestic products.

Question 3. What is the effect of tariffs on international trade?

1. Encourages free trade
2. Decreases imports
3. Increases exports
4. None of the above

Answer: 2. Decreases imports

Explanation: 

Tariffs make imported goods more expensive, which can discourage imports and lead to a decrease in international trade. This can lead to trade tensions between countries and potentially result in retaliatory tariffs being implemented.

Question 4. What is the effect of tariffs on government revenue?

1. Decreases government revenue
2. Increases government revenue
3. Does not affect government revenue
4. None of the above

Answer: 2. Increases government revenue

Explanation:

Tariffs are a form of tax on imported goods, which generates revenue for the government. This revenue can be used to fund various government programs and initiatives. However, excessive tariffs can lead to a decrease in international trade, which can negatively impact economic growth and development.

Non-Tariff Measures (NTMS)

Question 1. What are Non-tariff measures (NTMs)?

1. Barriers to trade
2. Taxes on international trade
3. Regulations on international trade
4. None of the above

Answer: 3. Regulations on international trade

Explanation:

Non-tariff measures (NTMs) refer to a wide range of regulations and policies that can act as barriers to trade. These can include sanitary and phytosanitary regulations, technical standards, and licensing requirements, among others.

Question 2. What is the purpose of non-tariff measures (NTMs)?

1. To increase competition
2. To decrease competition
3. To protect domestic industries
4. None of the above

Answer: 3. To protect domestic industries

Explanation:

The purpose of non-tariff measures (NTMs) is to protect domestic industries and ensure that they are not adversely affected by international trade. These measures can be used to address issues such as quality and safety standards, environmental protection, and consumer protection.

Question 3. What are some examples of non-tariff measures (NTMs)?

1. Quotas
2. Licenses
3. Quality standards
4. All of the above

Answer: 4. All of the above

Explanation:

Examples of non-tariff measures (NTMs) include quotas, licensing requirements, quality standards, safety regulations, technical barriers to trade, and environmental regulations, among others.

Question 4. What is the effect of non-tariff measures (NTMs) on international trade?

1. Encourages free trade
2. Increases imports
3. Decreases exports
4. Can either increase or decrease imports and exports depending on the specific measure

Answer: 4. Can either increase or decrease imports and exports depending on the specific measure

Explanation:

The effect of non-tariff measures (NTMs) on international trade can vary ‘ depending on the specific measure. Some measures may increase imports or exports by ensuring product quality or safety, while others may restrict trade by imposing additional requirements or barriers.

Question 5. What are non-tariff measures (NTMs)?

1. Taxes on imported goods
2. Regulations, standards, and procedures that impact trade
3. Trade agreements between countries
4. None of the above

Answer: 2. Regulations, standards, and procedures that impact trade

Explanation:

Non-tariff measures (NTMs) refer to a variety of regulations, standards, and procedures that trade partners use to manage their trade ‘ relationships. These measures can include product standards,
licensing requirements, and restrictions on imports.

Question 6. What is the effect of NTMs on trade?

1. Increases trade barriers
2. Encourages free trade
3. Does not affect trade
4. None of the above

Answer: 1. Increases trade barriers

Explanation:

Non-tariff measures can increase trade barriers between countries. They can make it more difficult for companies to export goods and gain access to foreign markets, which can limit the amount of trade that takes place.

Question 7. Why do countries use NTMs?

1. To protect domestic industries
2. To promote free trade
3. To improve product quality and safety
4. None of the above

Answer: 3. To improve product quality and safety

Explanation:

Non-tariff measures can be used by countries to improve the quality and safety of imported goods. They can also be used to protect domestic industries and promote fair competition among trading partners.

Question 8. What are some examples of NTMs?

1. Tariffs and quotas
2. Export restrictions and subsidies
3. Product standards and labeling requirements
4. None of the above.

Answer: 3. Product standards and labeling requirements

Explanation:

Non-tariff measures can include a wide range of regulations, such as product standards, labeling requirements, and licensing procedures. These measures are designed to protect consumers and ensure that products meet certain quality and safety standards.

Question 9. What are technical measures in international trade?

1. Regulations related to the technical aspects of products
2. Import taxes on technical products
3. Technical agreements between trading partners
4. None of the above

Answer: 1. Regulations related to the technical aspects of products

Explanation:

Technical measures refer to regulations that govern the technical aspects of products, such as their composition, safety, and performance. These measures are designed to protect consumers and ensure that products meet certain quality and safety standards.

Question 10. Why are technical measures used in trade?

1. To limit the import of particular products
2. To ensure that imported products meet local standards
3. To reduce competition from foreign products
4. None of the above

Answer: 2. To ensure that imported products meet local standards

Explanation:

Technical measures are designed to ensure that products imported from foreign countries meet local standards for safety and quality. They are not intended to limit the import of specific products or reduce competition from foreign goods.

Question 11. What are some examples of technical measures?

1. Product labeling and packaging requirements
2. Safety and environmental standards
3. Chemical content and composition restrictions
4. All of the above

Answer: 4. All of the above

Explanation:

Technical measures can include a wide range of regulations, such as product labeling and packaging requirements, safety and environmental standards, and restrictions on the chemical content and composition of products.

Question 12. What is the impact of technical measures on trade?

1. Increases competition from foreign products
2. Reduces competition from foreign products
3. Has no impact on competition from foreign products
4. None of the above

Answer: 2. Reduces competition from foreign products

Explanation:

Technical measures can reduce competition from foreign products, as they can make it more difficult for foreign companies to meet certain technical standards and gain access to local markets. This can benefit domestic industries, but it can also limit consumer choice and increase prices for certain products.

Question 13. What are non-technical measures in international trade?

1. Regulations related to the technical aspects of products
2. Regulations not directly related to the technical aspects of products
3. Import taxes on non-technical products
4. None of the above

Answer: 2. Regulations not directly related to the technical aspects of products

Explanation:

Non-technical measures refer to regulations that are not directly related to the technical aspects of products, such as regulations related to market access, procurement, and investment.

Question 14. Why are non-technical measures used in trade?

1. To limit the import of particular products
2. To promote free and fair trade
3. To reduce competition from foreign products
4. None of the above

Answer: 2. To promote free and fair trade.

Explanation:

Non-technical measures are designed to promote free and fair trade between countries. They can help to ensure that companies have equal access to foreign markets, and they can promote competition and innovation in industries.

Question 15. What are some examples of non-technical measures?

1. Licensing requirements for foreign companies
2. Government procurement policies
3. Investment restrictions
4. All of the above

Answer: 4. All of the above

Explanation:

Non-technical measures can include a wide range of regulations, such as licensing requirements for foreign companies, government procurement policies, and investment restrictions. ’

Question 16. What is the impact of non-technical measures on trade?

1. Increases competition from foreign products
2. Reduces competition from foreign products
3. Has no impact on competition from foreign products
4. Depends on the specific regulation

Answer: 4. Depends on the specific regulation

Explanation:

The impact of non-technical measures on trade can vary depending on the specific regulation in question. Some measures may restrict competition from foreign products, while others may promote free and fair trade between countries.

Question 17. Non-tariff measures (NTMs) are trade policy instruments that do not involve

1. Import and export restrictions
2. Trade liberalization
3. Government subsidies
4. Direct taxes on goods and services

Answer: 1. Import and export restrictions

Question 18. Examples of non-tariff measures include

1. Import tariffs and export quotas
2. Subsidies to domestic industries
3. Health and safety regulations, product standards, and licensing requirements
4. Fiscal policies and monetary policies

Answer: 3. Health and safety regulations, product standards, and licensing requirements

Question 19. Non-tariff measures are often used to:

1. Promote free trade and globalization
2. Increase foreign direct investment
3. Facilitate cross-border trade and reduce transaction costs
4. Protect domestic industries, ensure product quality, and address environmental concerns

Answer: 4. Protect domestic industries, ensure product quality, and address environmental concerns

Question 20. Voluntary export restraints (VERs) are an example of

1. Export promotion policies
2. Trade liberalization measures
3. Non-tariff trade barriers imposed by the exporting country
4. Measures to stabilize foreign exchange rates

Answer: 3. Non-tariff trade barriers imposed by the exporting country

Question 21. Sanitary and phytosanitary (SPS) measures are NTMs designed to

1. Promote tourism and travel
2. Facilitate labor migration
3. Regulate the import and export of food, plants, and animals to ensure safety and prevent the spread of diseases
4. Encourage foreign investment in critical sectors

Answer: 3. Regulate the import and export of food, plants, and animals to ensure safety and prevent the spread of diseases

Technical Measures

Question 1. Which of the following is an example of a technical measure in international trade?

1. Import quotas on foreign cars
2. Requirements for product safety labeling
3. Tariffs on textiles from foreign countries
4. Subsidies for domestic agricultural producers.

Answer: 2. Requirements for product safety labeling

Explanation:

A technical measure is a regulation that governs the technical aspects of products, such as safety and performance. Requirements for product safety labeling are an example of a technical measure as they are designed to protect consumers and ensure that products meet certain quality and safety standards.

Question 2. What is the purpose of technical measures in international trade?

1. To limit the import of foreign products
2. To ensure that imported products meet local standards
3. To promote fair competition between countries
4. None of the above

Answer: 2. To ensure that imported products meet local standards

Explanation: 

Technical measures are designed to ensure that products imported from foreign countries meet local standards for safety and quality. Their purpose is not to limit the import of specific products or to promote competition.

Question 3. Which of the following is an example of a technical measure related to environmental standards?

1. Restrictions on the use of hazardous chemicals in manufacturing
2. Requirements for product labeling and packaging
3. Quotas on the import of foreign textiles
4. Subsidies for domestic energy producers

Answer: 1. Restrictions on the use of hazardous chemicals in manufacturing

Explanation:

Technical measures related to environmental standards can include restrictions on the use of hazardous chemicals in manufacturing, which are designed to protect the environment and ensure that products meet certain safety standards.

Question 4. How can technical measures impact trade between countries?

1. They can increase competition from foreign products
2. They can reduce competition from foreign products
3. They can have no impact on competition from foreign products
4. It depends on the specific technical measure

Answer: 2. They can reduce competition from foreign products

Explanation:

Technical measures can make it more difficult for foreign companies to meet certain technical standards and gain access to local markets, which can reduce competition from foreign products. However, they can also benefit domestic industries by ensuring that imported products meet local standards for safety and quality.

1. Sanitary and Phytosanitary (SPS) measures

Question 1.  What are Sanitary and Phytosanitary (SPS) measures?

1. Technical measures related to environmental standards
2. Regulations related to the technical aspects of products
3. Regulations related to the health and safety of humans, animals, and plants
4. None of the above

Answer: 3. Regulations related to the health and safety of humans, animals, and plants

Explanation:

Sanitary and Phytosanitary (SPS) measures are regulations related to the health and safety of humans, animals, and plants. They are designed to protect against the spread of diseases and pests in the movement of food and agricultural products across international borders.

Question 2. What is the purpose of SPS measures?

1. To reduce competition from foreign products
2. To increase the import of foreign products
3. To protect human, animal, and plant health
4. None of the above

Answer: 3. To protect human, animal, and plant health

Explanation:

SPS measures are designed to protect against risks to human, l animal, and plant health that may arise from the movement of food and agricultural products across international borders. Their purpose is to ensure that products meet certain health and safety standards, not to limit the import or promotion of competition.

Question 3. Which of the following is an example of an SPS measure?

1. A restriction on the import of foreign textiles to protect domestic textile manufacturers
2. A requirement for imported fruits to be free from a certain pest
3. A tax on imports of cars to promote the domestic auto industry
4. None of the above

Answer: 3. A requirement for imported fruits to be free from a certain pest

Explanation:

SPS measures can include requirements for imported products to meet certain health and safety standards, such as being free from certain pests or diseases. They are not designed to promote domestic industries or limit the import of certain products.

Question 4. How can SPS measures impact trade between countries?

1. They can reduce competition from foreign products
2. They can increase competition from foreign products
3. They can have no impact on competition from foreign products
4. It depends on the specific SPS measure

Answer: 4. It depends on the specific SPS measure

Explanation:

The impact of SPS measures on trade between countries can vary depending on the specific measure in question. Some measures may restrict competition from foreign products, while others may promote free and fair trade between countries by ensuring that products meet certain health and safety standards.

2. Technical Barriers to Trade (TBT)

Question 1. What are Technical Barriers to Trade (TBT)?

1. Regulations related to the health and safety of humans, animals, and plants
2. Regulations related to the technical aspects of products
3. Regulations related to environmental standards
4. None of the above

Answer: 2. Regulations related to the technical aspects of products

Explanation:

Technical Barriers to Trade (TBT) are regulations or standards that relate to the technical aspects of products, such as quality, safety, and labeling requirements. They can include specifications on
product performance, packaging, testing methods, and certification procedures.

Question 2. What is the purpose of Technical Barriers to Trade?

1. To restrict or limit the importation of certain products
2. To promote fair competition between countries
3. To ensure that imported products meet local technical standards
4. All of the above

Answer: 4. All of the above

Explanation:

The purpose of Technical Barriers to Trade can vary depending on the specific regulation or standard. They can be used to restrict or limit imports of certain products, to promote fair competition between countries, and to ensure that imported products meet local technical standards for quality, safety, and other requirements.

Question 3. Which of the following is an example of a Technical Barrier to Trade?

1. Import quotas on foreign textiles
2. Requirements for labeling and packaging of pharmaceutical products
3. Tariffs on imported steel
4. Subsidies for domestic manufacturers

Answer: 2. Requirements for labeling and packaging of pharmaceutical products.

Explanation:

Requirements for labeling and packaging of pharmaceutical products are an example of a Technical Barrier to Trade. They are regulations that relate to the technical aspects of the product (labeling and packaging) and are designed to ensure that imported pharmaceutical products meet local standards and requirements.

Question 4. How can Technical Barriers to Trade impact trade between countries?

1. They can increase competition from foreign products
2. They can reduce competition from foreign products
3. They can have no impact on competition from foreign products
4. It depends on the specific Technical Barrier to Trade

Answer: 2. They can reduce competition from foreign products

Explanation:

Technical Barriers to Trade can create additional requirements and standards that foreign products must meet to be sold in a particular market. This can make it more difficult for foreign companies to compete and reduce competition from foreign products. However, their impact can vary depending on the specific Technical Barrier to Trade.

Non-Technical Measures

Question 1. What are non-technical measures in trade?

1. Regulations related to the technical aspects of products
2. Regulations related to the health and safety of humans, animals, and plants.
3. Regulations related to non-tariff barriers, such as quotas and subsidies
4. None of the above.

Answer: 3. Regulations related to non-tariff barriers, such as quotas and subsidies

Explanation:

Non-technical measures in trade refer to regulations that are not directly related to the technical aspects of products. They include non-tariff barriers, such as quotas, subsidies, import licensing, and product testing requirements.

Question 2. What is the purpose of non-technical measures?

1. To promote fair competition between countries
2. To restrict or limit the importation of certain products
3. To ensure that imported products meet safety and quality standards
4. All of the above

Answer: 4. All of the above

Explanation: 

Non-technical measures can serve multiple purposes. They can be used to promote fair competition between countries, restrict or limit the importation of certain products, and ensure that imported products meet safety and quality standards. The specific purpose may vary depending on the regulation or measure in question.

Question 3. Which of the following is an example of a non-technical measure?

1. Requirements for product labeling
2. Import quotas
3. Product testing requirements
4. All of the above

Answer: 4. All of the above

Explanation:

Examples of non-technical measures include requirements for product labeling, import quotas, and product testing requirements. These measures are usually imposed to control or regulate the importation of certain products and can affect trade between countries.

Question 4. How can non-technical measures impact trade between countries?

1. They can reduce competition from foreign products
2. They can increase competition from foreign products
3. They can have no impact on competition from foreign products
4. It depends on the specific non-technical measure

Answer: 1. They can reduce competition from foreign products

Explanation: 

Non-technical measures, such as import quotas or subsidies, can create barriers for foreign products, reducing competition from these products. They can make it more difficult for foreign companies to access a particular market and can impact trade by limiting the importation of certain products. However, the impact can vary depending on the specific non-technical measure in question

1. Important Quotas

Question 1. What is an import quota?

1. A tax imposed on imported goods
2. A limit on the quantity of a particular product that can be imported
3. A requirement to label imported products
4. None of the above

Answer: 3. A limit on the quantity of a particular product that can be imported

Explanation:

An import quota is a limit on the quantity of a particular product that can be imported into a country. This limit is often imposed by governments to control the amount of foreign products entering its market.

Question 2. What is the purpose of import quotas?

1. To promote fair competition between countries
2. To restrict or limit the importation of certain products
3. To ensure that imported products meet ‘safety and quality standards
4. None of the above

Answer: 2. To restrict or limit the importation of certain products

Explanation:

The purpose of import quotas is often to restrict or limit the importation of certain products into a country. This can be done to protect domestic industries, promote local economic development, or control market competition.

Question 3. How can import quotas impact trade between countries?

1. They can reduce competition from foreign products
2. They can increase competition from foreign products
3. They can have no impact on competition from foreign products
4. It depends on the specific import quota

Answer: 1. They can reduce competition from foreign products

Explanation:

Import quotas can limit the quantity of foreign products that can enter a market, reducing competition from foreign products. This can make it more difficult for foreign companies to access a particular market and can have an impact on trade by limiting the importation of certain products.

Question 4. Can import quotas be challenged under international trade rules?

1. Yes, they can be challenged under the rules set by the World Trade Organization (WTO)
2. No, import quotas cannot be challenged under international trade rules
3. It depends on the specific country and their trade agreements

Answer: 3. Yes, they can be challenged under the rules set by the World Trade Organization (WTO)

Explanation:

Import quotas can be challenged under international trade rules set by the World Trade Organization (WTO), which prohibits discriminatory and protectionist trade measures. However, the specific rules and regulations depend on the country and its trade agreements.

2. Price Control  Measures

Question 1. What are price control measures in trade?

1. Regulations that control the quality and safety of products
2. Regulations that control the prices of goods and services
3. Regulations that control the quantity of imports and exports
4. None of the above

Answer: 2. Regulations that control the prices of goods and services

Explanation:

Price control measures are regulations that control the prices of goods and services, often imposed by governments to protect consumers or control inflation.

Question 2. What is the purpose of price control measures?

1. To promote fair competition between countries
2. To restrict or limit the importation of certain products
3. To ensure that imported products meet safety and quality standards
4. To protect consumers from unfairly high prices

Answer: 4. To protect consumers from unfairly high prices Explanation:

The purpose of price control measures is to protect consumers from unfairly high prices, control inflation, or ensure that essential goods and services remain affordable.

Question 3. How can price control measures impact trade between countries?

1. They can reduce competition from foreign products
2. They can increase competition from foreign products
3. They can have no impact on competition from foreign products
4. It depends on the specific price control measure

Answer:  1. They can reduce competition from foreign products

Explanation:

Price control measures can make it difficult for foreign products to compete in a particular market, reducing competition from these products. They can also make it more difficult for foreign companies to access a particular market if the price controls limit the profitability of their products

Question 4. Can price control measures be challenged under international trade rules?

1. Yes, they can be challenged under the rules set by the World Trade Organization (WTO)
2. No, price control measures cannot be challenged under international trade rules
3. It depends on the specific country and their trade agreements

Answer:  1. Yes, they can be challenged under the rules set by the World  Trade Organization (WTO)

Explanation: 

Price control measures can be challenged under international trade rules set by the World Trade Organization (WTO), which prohibits discriminatory and protectionist trade measures. However, the specific rules and regulations depend on the country and its trade agreements.

3. Non-Automatic Licensing And Prohibitions

Question 1. What are non-automatic licensing and prohibitions in trade?

1. Regulations that control the quality and safety of products
2. Regulations that require special licenses for certain imported goods
3. Regulations that restrict or prohibit the import or export of certain products
4. None of the above

Answer: 3. Regulations that restrict or prohibit the import or export of certain products

Explanation:

Non-automatic licensing and prohibitions refer to regulations that restrict or prohibit the import or export of certain products. These regulations often require special licenses for the import or export of these products.

Question 2. What is the purpose of non-automatic licensing and prohibitions?

1. To promote fair competition between countries
2. To restrict or limit the importation of certain products
3. To ensure that imported products meet safety and quality standards
4. To protect national security or cultural heritage

Answer: 4. To protect national security or cultural heritage

Explanation:

The purpose of non-automatic licensing and prohibitions is often to protect national security or cultural heritage by restricting or prohibiting the import or export of certain products that could pose a threat or have significant cultural or historical value.

Question 3. How can non-automatic licensing and prohibitions impact trade between countries?

1. They can reduce competition from foreign products
2. They can increase competition from foreign products
3. They can have no impact on competition from foreign products
4. It depends on the specific non-automatic licensing or prohibition

Answer: 2. They can reduce competition from foreign products

Explanation:

Non-automatic licensing and prohibitions can make it difficult for foreign products to enter a particular market, reducing competition from these products. The restrictions or prohibitions can limit the import or export of certain products, making it more challenging for foreign companies to access a market or compete with domestic businesses.

Question 4. Can non-automatic licensing and prohibitions be challenged under international trade rules?

1. Yes, they can be challenged under the rules set by the World Trade Organization (WTO)
2. No, non-automatic licensing and prohibitions cannot be challenged under international trade rules
3. It depends on the specific country and their trade agreements

Answer: 1. Yes, they can be challenged under the rules set by the World Trade Organization (WTO)

Explanation:

Non-automatic licensing and prohibitions can be challenged under international trade rules set by the World Trade Organization (WTO). The WTO allows member countries to file complaints if they believe that another country’s non-automatic licensing or prohibition measures are discriminatory or violate international trade rules. However, the specific rules and regulations depend on the country and its trade agreements.

4. Financial Measures

Question 1. What are the financial measures in trade?

1. Regulations that control the quality and safety of products
2. Regulations that control the prices of goods and services
3. Regulations that restrict or limit the flow of capital between countries
4. None of the above

Answer: 4. Regulations that restrict or limit the flow of capital between countries

Explanation:

Financial measures in trade refer to regulations that restrict or limit the flow of capital between countries, such as restrictions on foreign investment or foreign exchange controls.

Question 2. What is the purpose of financial measures in trade?

1. To promote fair competition between countries
2. To restrict or limit the importation of certain products
3. To protect domestic companies from foreign investment
4. To control the flow of capital for economic stability

Answer: 4. To control the flow of capital for economic stability

Explanation:

The purpose of financial measures in trade is to control the flow of capital for economic currency fluctuations in the economy

Question 3. How can financial measures impact trade between countries 

1. They can reduce competition from foreign products
2. They can increase competition from foreign products
3. They can limit the ability of foreign companies to invest in a market
4. None of the above

Answer: They can limit the ability of foreign companies to invest in a market

Explanation:

Financial measures can limit the ability of foreign companies to invest in the market by restricting foreign investment can the market or imposing foreign exchange controls. These regulations can make or completely challenging for foreign companies to access a market or compete with domestic businesses.

Question 4. Can financial measures be challenged under international trade rules?

1. Yes, they can be challenged under the rules set by the  World Trade Organization (WTO)
2. No, financial measures cannot be  challenged under international trade rules
3. It depends on the specific country and their race agreements

Answer:  3. It depends on the specific country and the’ race agreements.

Explanation:

It depends on the specific country and the’ race agreements

5. Measures Affecting Competition

Question 1. What are measures affecting competition in trade?

1. Regulations that control the quality and safety of products
2. Regulations that control the prices of goods and services
3. Regulations that restrict or limit the ability of companies to compete in a market
4. None of the above

Answer: 3. Regulations that restrict or limit the ability of companies to compete in a market

Explanation:

Measures affecting competition in trade refer to regulations that restrict or limit the ability of companies to compete in a market, such as regulations that favor domestic companies over foreign companies or anti-competitive practices by dominant companies.

Question 2. What is the purpose of measures affecting competition in trade?

1. To promote fair competition between countries
2. To restrict or limit the importation of certain products
3. To protect domestic companies from foreign competition
4. To prevent anti-competitive behavior and promote consumer welfare

Answer: 4.  To prevent anti-competitive behavior and promote consumer welfare

Explanation:

The purpose of measures affecting competition in trade is to prevent anti-competitive behavior and promote consumer welfare by ensuring fair competition between companies in a market.

Question 3. How can measures affecting competition impact trade between countries?

1. They can reduce competition from foreign products
2. They can increase competition from foreign products
3. They can limit the ability of foreign companies to compete In a market
4. None of the above

Answer: 3. They can limit the ability of foreign companies to compete In a market

Explanation:

Measures affecting competition can limit the ability of foreign companies to compete in a market by favoring domestic companies or imposing restrictions on foreign companies. Those regulations can make it more challenging for foreign companies to access a market or compete with domestic businesses.

Question 4. Can measures affecting competition be challenged under international trade rules?

1. Yes, they can be challenged under the rules set by the World Trade Organization (WTO)
2. No, measures affecting competition cannot be challenged under international trade rules
3. It depends on the specific country and their trade agreements

Answer:  1. Yes, they can be challenged under the rules set by tho World Trade Organization (WTO)

Explanation:

Measures affecting competition can be challenged under international trade rules set by the World Trade Organization (WTO). The WTO allows member countries to file complaints if they believe that another country’s measures affecting competition are discriminatory or violate international trade rules. However, the specific rules and regulations depend on the country and its trade agreements.

6. Government Procurement Policies

Question 1. What are government procurement policies in trade?

1. Policies that regulate the quality and safety of products purchased by the government
2. Policies that regulate the prices paid for products purchased by the government
3. Policies that regulate the process for government contracts and purchases
4. None of the above

Answer: 3. Policies that regulate the process for government contracts and purchases

Explanation:

Government procurement policies refer to policies that regulate the process for government contracts and purchases, such as guidelines for bidding processes and criteria for selecting suppliers.

Question 2. What is the purpose of government procurement policies in trade?

1. To promote fair competition between companies for government contracts
2. To restrict or limit the importation of certain products purchased by the government
3. To protect domestic suppliers from foreign competition for government contracts
4. To ensure transparency and accountability in government procurement processes

Answer:  4. To ensure transparency and accountability in government procurement processes

Explanation:

The purpose of government procurement policies in trade is to ensure transparency and accountability in government procurement processes, such as preventing corruption and favoritism in the selection of suppliers.

Question 3. How can government procurement policies impact trade between countries?

1. They can restrict competition from foreign suppliers for government contracts
2. They can increase competition from foreign suppliers for government contracts
3. They can limit the ability of foreign suppliers to participate in government procurement processes
4. None of the above

Answer: 1. They can restrict competition from foreign suppliers for government contracts

Explanation:

Government procurement policies can restrict competition from foreign suppliers for government contracts by favoring domestic suppliers or imposing requirements that foreign suppliers cannot meet. These policies can limit the ability of foreign suppliers to participate in government procurement processes and reduce their opportunities in the market.

Question 4. Can government procurement policies be challenged under international trade rules?

1. Yes, they can be challenged under the rules set by the World Trade Organization (WTO)
2. No, government procurement policies cannot be challenged under international trade rules
3. It depends on the specific country and their trade agreements

Answer: 1. Yes, they can be challenged under the rules set by the World Trade Organization (WTO)

Explanation:

Government procurement policies can be challenged under the rules set by the World Trade Organization (WTO). The WTO allows member countries to file complaints if they believe that another country’s government procurement policies are discriminatory or violate international trade rules. However, the specific rules and regulations depend on the country and its trade agreements.

7. Trade-Related Investment Measures

Question 1. What are Trade-Related Investment Measures (TRIMs)?

1. Policies that promote free trade and open markets
2. Policies that impose restrictions on trade and investments
3. Policies that facilitate foreign direct investment (FDI)
4. Policies that encourage the import of raw materials

Answer: 2. Policies that impose restrictions on trade and investments

Explanation:

Trade-related investment Measures (TRIMs) are policies that impose restrictions or regulations on foreign investors or domestic investors with foreign connections.

Question 2. Which organization oversees the Agreement on Trade-Related Investment Measures (TRIMs)?

1. International Monetary Fund (IMF)
2. World Trade Organization (WTO)
3. United Nations (UN)
4. World Bank

Answer: 2. World Trade Organization (WTO)

Explanation:

The World Trade Organization (WTO) oversees the Agreement on Trade-Related Investment Measures (TRIMs) to ensure fair and non-discriminatory treatment of foreign investors.

Question 3. How do Trade-Related Investment Measures impact international trade?

1. They promote FDI and boost trade flows
2. They create barriers to trade and deter foreign investments
3. They only affect domestic investments, not international trade
4. They have no impact on trade or investment

Answer: 2. They create barriers to trade and deter foreign investments

Explanation:

Trade-Related Investment Measures can create trade barriers and deter foreign investments, potentially restricting the flow of goods and services across borders.

Question 4. Which of the following is an example of a TRIM?

1. Export subsidies to domestic producers
2. Tariffs on imported goods
3. Preferential treatment for local investors over foreign investors
4. Reducing bureaucratic procedures for all investors

Answer: Preferential treatment for local investors over foreign investors

Explanation:

Giving preferential treatment to local investors over foreign investors is an example of a Trade-Related Investment Measure.

8. Distribution Restrictions

Question 1. What do distribution restrictions in international trade refer to?

1. Policies that promote the free flow of goods and services across borders
2. Policies that restrict the distribution of goods and services within a country
3. Policies that encourage foreign direct investment (FDI)
4. Policies that reduce import tariffs

Answer: 2. Policies that restrict the distribution of goods and services within a country

Explanation:

Distribution restrictions refer to policies that limit or control the distribution of goods and services within a country’s domestic market.

Question 2. Which of the following is an example of a distribution restriction?

1. Export subsidies to domestic producers
2. Eliminating import quotas on specific products
3. Licensing requirements for the sale of certain goods
4. Reducing bureaucratic procedures for exporters

Answer: 3. Licensing requirements for the sale of certain goods

Explanation:

Requiring a license for the sale of certain goods is an example of a distribution restriction as it controls the distribution of those goods in the domestic market.

Question 3. How do distribution restrictions impact trade and investment?

1. They promote cross-border trade and foreign investments
2. They facilitate the distribution of goods and services domestically
3. They create barriers to entry for foreign companies in the domestic market
4. They have no impact on trade or investment

Answer: 3. They create barriers to entry for foreign companies in the domestic market

Explanation:

Distribution restrictions can create barriers to entry for foreign companies, limiting their ability to distribute goods and services in the domestic market.

Question 4. Which international organization advocates for reducing distribution restrictions and trade barriers?

1. International Monetary Fund (IMF)
2. World Trade Organization (WTO)
3. United Nations (UN)
4. World Bank

Answer: 2. World Trade Organization (WTO)

Explanation:

The World Trade Organization (WTO) advocates for reducing distribution restrictions and trade barriers to promote freer trade and market access.

9. Restriction on Post-sales Services

Question 1. What do restrictions on post-sales services in international trade refer to?

1. Policies that promote after-sales services for domestic products
2. Policies that regulate the provision of after-sales services for imported products
3. Policies that encourage foreign companies to invest in service sectors
4. Policies that reduce import tariffs on services

Answer: 2. Policies that regulate the provision of after-sales services for imported products the provision of after-sales services for imported products in a country.

Question 2. Which of the following is an example of a restriction on post-sales services?

1. Allowing foreign service providers to operate without any restrictions
2. Requiring special permits for domestic service providers to offer services
3. Providing tax incentives for companies offering after-sales services
4. Implementing a streamlined process for product imports

Answer: 2. Requiring special permits for domestic service providers to offer services

Explanation:

Requiring special permits for domestic service providers to offer after-sales services is an example of a restriction on post-sales services

Question 3. How do distribution restrictions impact trade and investment?

1. They promote cross-border trade and foreign investments
2. They facilitate the distribution of goods and services domestically
3. They create barriers to entry for foreign companies in the domestic market
4. They have no impact on trade or investment

Answer: 3. They create barriers to entry for foreign companies in the domestic market

Explanation:

Restrictions on post-sales services can create barriers for foreign service providers, limiting their ability to offer services for imported products in the domestic market.

 Question 4. Which international trade principle do restrictions on post-sales services violate?

1. Most Favored Nation (MFN) treatment
2. National treatment
3. Export-oriented industrialization
4. Import substitution

Answer: 2. National Treatment

Explanation:

Restrictions on post-sales services may violate the principle of national treatment, which requires treating foreign and domestic service providers equally once they are established in the domestic market.

10. Administrative Procedures

Question 1. What do administrative procedures in international trade refer to?

1. Policies that promote the free flow of goods and services across borders
2. Processes and formalities related to customs and trade regulations
3. Policies that encourage foreign direct investment (FDI)
4. Policies that reduce import tariffs

Answer: 2. Processes and formalities related to customs and trade regulations

Explanation:

Administrative procedures in international trade refer to the processes and formalities that traders must go through to comply with customs regulations and other administrative requirements.

Question 2. Which of the following is an example of an administrative procedure in international trade?

1. Reducing trade barriers for specific products
2. Implementing export subsidies for domestic producers
3. Conducting customs inspections and document verification
4. Providing tax incentives to foreign investors

Answer: 3. Conducting customs inspections and document verification

Explanation:

Conducting customs inspections and verifying trade-related documents are examples of administrative procedures in international trade.

Question 3. How can streamlined administrative procedures impact international trade?

1. They increase bureaucracy and slow down trade flows
2. They promote efficiency and facilitate cross-border transactions
3. They create barriers to entry for foreign companies
4. They have no impact on trade or investment

Answer: 2. They promote efficiency and facilitate cross-border transactions

Explanation:

Streamlined administrative procedures can reduce bureaucracy and facilitate faster and smoother cross-border trade transactions.

Question 4. Which international organization advocates for simplifying administrative procedures and reducing trade barriers?

1. International Monetary Fund (IMF)
2. World Trade Organization (WTO)
3. United Nations (UN)
4. World Bank

Answer: 2. World Trade Organization (WTO)

Explanation:

The World Trade Organization (WTO) advocates for simplifying administrative procedures and reducing trade barriers to promote smoother international trade.

11. Rules of origin

Question 1. What are the Rules of Origin in international trade?

1. Guidelines for exporting goods to foreign countries
2. Criteria used to determine the country of origin of goods
3. Standards for product quality and safety in international trade
4. Guidelines for customs valuation of imported goods

Answer: 2. Criteria used to determine the country of origin of goods

Explanation:

Rules of Origin are criteria used to determine the country of origin of goods in international trade.

Question 2. Why are Rules of Origin important in trade agreements?

1. They encourage the transshipment of goods between countries
2. They determine the quality and safety standards of imported goods
3. They prevent trade fraud and ensure fair trade practices ‘
4. They only apply to certain types of services, not goods

Answer: 3. They prevent trade fraud and ensure fair trade practices

Explanation:

Rules of Origin help prevent trade fraud by ensuring that only goods genuinely produced in a particular country receive trade-related benefits under preferential trade agreements.

Question 3. Which of the following is an example of a Rule of Origin?

1. Reducing import tariffs on specific products
2. Conducting customs inspections at the border
3. Requiring a certain percentage of value-added to be produced locally
4. Implementing export quotas for certain industries

Answer: 3. Requiring a certain percentage of value-added to be produced locally

Explanation:

Requiring a certain percentage of value-added to be produced. locally is an example of a Rule of Origin criterion.

Question 4. How do Rules of Origin affect global supply chains?

1. They promote the reshoring of manufacturing activities to domestic markets
2. They encourage companies to offshore production to low-cost countries
3. They have no impact on global supply chains
4. They only apply to services, not manufacturing activities

Answer: 2. They encourage companies to offshore production to low-cost countries

Explanation:

Rules of Origin can influence companies to offshore production to countries with lower production costs to meet the criteria for preferential treatment under trade agreements.

12. Safeguard Measures

Question 1. What are Safeguard Measures in international trade?

1. Permanent trade restrictions on certain products
2. Temporary trade remedies to protect domestic industries from import surges’
3. Preferential trade agreements between two or more countries
4. Subsidies provided by governments to support exports

Answer: 2. Temporary trade remedies to protect domestic, industries from import surges

Explanation:

Safeguard Measures are temporary trade remedies implemented by governments to protect domestic industries from a sudden surge in imports that may cause serious injury or threat to their viability.

Question 2. When can a country apply Safeguard Measures under the WTO rules?

1. When imports are cheaper than domestically produced goods
2. When imports exceed a certain percentage of total trade
3. When domestic industries face serious injury or threat due to import surges
4. When there is a need to promote free trade and open markets

Answer: 3. When domestic industries face serious injury or threat due to import surges

Explanation:

According to WTO rules, a country can apply Safeguard Measures – when its domestic industries face serious injury or are threatened by a surge in imports.

Question 3. Which of the following is an example of a Safeguard Measure?

1. Reducing import tariffs to boost international trade.
2. Imposing quotas on imported goods to protect domestic industries
3. Providing financial incentives for companies engaged in export activities
4. Implementing trade facilitation measures to streamline customs procedures

Answer: 2. Imposing quotas on imported goods to protect domestic industries

Explanation:

Imposing quotas on imported goods is an example of a Safeguard Measure, as it restricts the quantity of imports to protect domestic industries.

Question 4. How long can Safeguard Measures typically be in place under WTO rules? 

1. Indefinitely until a bilateral agreement is reached
2. Up to one year, with a possible extension to three years in exceptional cases
3. Until the domestic industry completely recovers from the import surge
4. Until all import duties are paid by the importing companies

Answer: Up to one year, with a possible extension to three years in exceptional cases.

Explanation:

Under WTO rules, Safeguard Measures can be implemented for up to one year, with a possible extension to a maximum of three years _ in exceptional cases.

13. Embargos

Question 1. What are embargos in international trade?

1. Temporary trade remedies to protect domestic industries
2. Customs duties imposed on specific imported goods
3. Government-imposed restrictions that prohibit or limit trade with a specific country
4. Preferential trade agreements between multiple countries

Answer: 3. Government-imposed restrictions that prohibit or limit trade with a specific country

Explanation:

Embargos are government-imposed restrictions that prohibit or severely limit trade with a specific country

Question 2. Why do countries impose embargos on international trade?

1. To promote free trade and open markets
2. To encourage cross-border investments
3. To express disapproval or exert pressure on a targeted country
4. To streamline customs procedures for faster trade transactions

Answer: 3. To express disapproval or exert pressure on a targeted country

Explanation:

Countries impose embargos as a foreign policy tool to express disapproval or exert economic pressure on a targeted country.

Question 3. Which of the following is an example of an embargo?

1. Imposing import tariffs on foreign products
2. Implementing trade facilitation measures to improve customs procedures
3. Prohibiting all trade with a specific country
4. Signing a free trade agreement with neighboring nations

Answer: 3. Prohibiting all trade with a specific country

Explanation:

Prohibiting all trade with a specific country is an example of an embargo.

Question 4. How do embargos impact international trade and economies?

1. They promote economic cooperation and growth among nations
2. They create trade opportunities for targeted countries
3. They can lead to economic isolation and disruptions in global supply chains
4. They have no significant impact on trade or economies

Answer: 3. They can lead to economic isolation and disruptions in global supply chains

Explanation:

Embargos can lead to economic isolation for the targeted country and disruptions in global supply chains as trade with that country is severely restricted or cut off.

Export-Related Measures

Question 1. What are export-related measures in international trade?

1. Government policies that restrict the import of specific goods
2. Actions Taken by countries to promote and facilitate exports
3. Customs duties imposed on imported products
4. Measures to regulate foreign direct investment (FDI)

Answer: 2. Actions taken by countries to promote and facilitate exports

Explanation:

Export-related measures are actions taken by countries to promote and facilitate the export of goods and services.

Question 2. Which of the following is an example of an export-related measure?

1. Imposing quotas on the import of certain products
2. Implementing tax incentives for exporters
3. Prohibiting foreign companies from investing in domestic markets
4. Reducing trade barriers for specific industries

Answer: 2. Implementing tax incentives for exporters

Explanation:

Providing tax incentives for exporters is an example of an export-related measure aimed at promoting and supporting export activities.

Question 3. How can export-related measures benefit a country’s economy?

1. By restricting foreign competition and protecting domestic industries
2. By encouraging imports and diversifying the domestic market
3. By promoting international trade and generating foreign exchange
4. By reducing the production of goods for domestic consumption

Answer: 3. By promoting international trade and generating foreign exchange

Explanation:

Export-related measures can benefit a country’s economy by promoting international trade, increasing exports, and generating foreign exchange earnings.

Question 4. Which of the following is not an export-related measure?

1. Export subsidies to support domestic industries
2. Simplified customs procedures for importers
3. Establishing export processing zones for manufacturing goods
4. Imposing import tariffs on foreign products

Answer: 2. Simplified customs procedures for importers

Explanation:

Simplified customs procedures for importers are not export-related measures. They are measures that facilitate imports, not exports.

1. Ban on exports

Question 1. What does a ban on exports in international trade signify?

1. A complete cessation of all imports and exports
2. A restriction on the importation of specific goods
3. A government-imposed prohibition on exporting certain goods
4. A policy encouraging free trade and open markets

Answer: 3. A government-imposed prohibition on exporting certain goods

Explanation:

A ban on exports signifies a government-imposed prohibition on exporting specific goods to other countries.

Question 2. Why might a country impose a ban on exports?

1. To promote international trade and economic growth
2. To maintain an adequate supply of essential goods domestically
3. To encourage foreign investment and technology transfer
4. To facilitate the movement of goods across borders

Answer: 2. To maintain an adequate supply of essential goods domestically

Explanation:

A country may impose a ban on exports to ensure an adequate domestic supply of essential goods, especially during times of shortages or crises.

Question 3. Which of the following is an example of a ban on exports?

1. Imposing import duties on specific goods
2. Implementing trade facilitation measures to expedite customs clearance.
3. Prohibiting the export of certain agricultural products during a food crisis
4. Signing a free.trade agreement with neighboring nations

Answer: 3. Prohibiting the export of certain agricultural products during a food crisis

Explanation:

Prohibiting the export of certain agricultural products during a food crisis is an example of a ban on exports.

Question 4. How can a ban on exports affect international trade relations?

1. It fosters stronger economic ties and cooperation among nations
2. It may lead to trade disputes and strain diplomatic relations
3. It promotes a harmonious trade balance between countries
4. It has no impact on international trade relations

Answer: 2. It may lead to trade disputes and strain diplomatic relations

Explanation:

A ban on exports can lead to trade disputes and strained diplomatic relations between the exporting country and its trading partners.

2. Export Taxes

Question 1. What are export taxes in international trade?

1. Taxes imposed on imported goods to protect domestic industries
2. Taxes imposed on goods and services that are exported from a country
3. Taxes levied on foreign investments in the domestic market
4. Taxes imposed on the profits of multinational corporations

Answer: 2. Taxes imposed on goods and services that are exported from a country

Explanation: 

Export taxes are taxes imposed by the government on goods and services that are exported from a country.

Question 2. Why might a government impose export taxes?

1. To promote international trade and export-oriented industries
2. To discourage the export of certain goods and preserve domestic supplies
3. To encourage foreign investment and technology transfer
4. To reduce the budget deficit and increase government revenue

Answer: 2. To discourage the export of certain goods and preserve domestic supplies

Explanation: 

To discourage the export of certain goods and preserve domestic supplies

Question 3. Which of the following is an example of an export tax?

1. Subsidizing domestic producers to compete in foreign markets
2. Reducing import duties on specific products
3. Imposing a tax on the export of raw materials
4. Providing financial incentives for companies engaged in export activities

Answer: 3. Imposing a tax on the export of raw materials

Explanation:

Imposing a tax on the export of raw materials is an example of an export tax.

Question 4. How can export taxes impact a country’s economy?

1. They encourage export-oriented industries and boost international trade
2. They promote the export of raw materials and strengthen domestic industries
3. They may lead to reduced export volumes and decreased competitiveness
4. They have no significant impact on the economy

Answer: 3. They may lead to reduced export volumes and decreased competitiveness

Explanation:

Export taxes can lead to reduced export volumes and decreased competitiveness of the country’s exports in the international market

3. Export Subsidies and Incentives

Question 1. What are export subsidies and incentives in international trade?

1. Taxes imposed on goods and services that are exported from a country
2. Financial benefits provided to domestic exporters to support their international trade activities
3. Taxes imposed on imported goods to protect domestic industries
4. Non-financial barriers that restrict the import of specific products

Answer: 2.  Financial benefits provided to domestic exporters to support their international trade activities

Explanation:

Export subsidies and incentives are financial or non-financial benefits given to domestic exporters to support and encourage their international trade efforts.

Question 2. Why might a government offer export subsidies and incentives to its exporters?

1. To discourage the export of certain goods and preserve domestic supplies
2. To promote import-oriented industries and increase trade deficits
3. To increase government revenue by taxing exports
4. To enhance the competitiveness of domestic products in the global market

Answer:  4. To enhance the competitiveness of domestic products in the global market

Explanation:

The government offers export subsidies and incentives to enhance the competitiveness of domestic products in the global market and promote exports

Question 3. Which of the following is an example of an export incentive?

1. Imposing tariffs on imported goods to protect domestic industries
2. Providing financial assistance to exporters for marketing and promotion activities
3. Implementing quotas on the import of specific products
4. Prohibiting foreign companies from investing in the domestic market

Answer: 2. Providing financial assistance to exporters for marketing and promotion activities

Explanation:

Providing financial assistance to exporters for marketing and promotion activities is an example of an export incentive.

Question 4. How can export subsidies and incentives impact a country’s exports and economy?

1. They may lead to increased exports and boost economic growth
2. They encourage import-oriented industries and increase trade deficits
3. They have no impact on a country’s exports or economy
4. They only benefit foreign companies, not domestic exporters

Answer: 1. They may lead to increased exports and boost economic growth

Explanation:

Export subsidies and incentives can lead to increased exports, thereby contributing to economic growth and supporting domestic industries engaged in international trade.

4. Voluntary Export Restraints

Question 1. What are Voluntary Export Restraints (VERs) in international trade?

1. Government-imposed restrictions on the import of specific goods
2. Agreements between exporting and importing countries to limit export quantities voluntarily
3. Financial benefits provided to domestic exporters to support international trade
4. Non-financial barriers that restrict the import of certain products

Answer: 2. Agreements between exporting and importing countries to limit export quantities voluntarily

Explanation:

Voluntary Export Restraints (VERs) are agreements between exporting and importing countries to voluntarily limit the quantity of goods exported to the importing country.

Question 2. Why do countries agree to Voluntary Export Restraints (VERs)?

1. To encourage foreign direct investment (FDI)
2. To promote free trade and open markets
3. To avoid the imposition of more stringent trade restrictions, such as tariffs or quotas
4. To increase government revenue from export taxes

Answer: 3. To avoid the imposition of more stringent trade restrictions, such as tariffs or quotas

Explanation:

Countries may agree to Voluntary Export Restraints (VERs) to avoid the imposition of more stringent trade restrictions that could harm trade relations.

Question 3. Which of the following is an example of a Voluntary Export Restraint (VER)?

1. Prohibiting all trade with a specific country
2. Implementing import quotas on certain goods
3. Restricting the export of specific products to a certain quantity
4. Providing financial incentives to domestic exporters

Answer: 3. Restricting tlm export of specific products to a certain quantify

Explanation:

Restricting the import of specific products to a certain quantity Is an example of a Voluntary Export Restraint (VER).

Question 4. How can Voluntary Export Restraints Impact International Undo?

1. They promote unrestricted Undo between countries
2. They may load to reduced availability of cot lain products In the importing country
3. They have no impact on trado relations between countries
4. They encourage countries to remove all trade barriers

Answer: 2. They may load to reduced availability of certain products In the importing country

Explanation:

Voluntary Export Restraints can lead to reduced availability of certain products in the importing country due to the limitations on export quantities.

Question 5. Export subsidies are a type of export-related measure that involves

1. Imposing taxes on exported goods
2. Providing financial incentives or support to domestic producers for exporting goods
3. Restricting the quantity of exported goods
4. Regulating the exchange rates for foreign buyers

Answer: 2. Providing financial incentives or support to domestic producers for exporting goods

Question 6. Export quotas are a form of export-related measure that involves

1. Providing tax breaks to exporters
2. Restricting the quantity of goods that can be exported
3. Offering subsidies to foreign buyers
4. Controlling the prices of exported goods

Answer: 2. Restricting the quantity of goods that can be exported

Question 7. The purpose of export-related measures, such as export subsidies and export quotas, is to

1. Encourage the import of foreign goods
2. Discourage domestic producers from exporting goods
3. Promote domestic consumption of goods
4. Support and boost the competitiveness of domestic industries in foreign markets

Answer: 4. Support and boost the competitiveness of domestic industries in foreign markets

Question 8. Export processing zones (EPZs) are designated areas that offer special incentives and benefits to

1. Importers of foreign goods
2. Domestic producers selling goods in the domestic market
3. Foreign investors and exporters
4. Government officials involved in trado policymaking

Answer: 3. Foreign investors and exporters

Question 9. The primary goal of establishing export processing zones (EPZs) is to

1. Increase imports and foreign direct investment.
2. Promote trade barriers and protectionism
3. Encourage economic growth through export-oriented industrialization
4. Support the growth of the domestic market and reduce reliance on exports

Answer: 3. Encourage economic growth through export-oriented industrialization.