Intermediate Part II

International Trade Important Short Questions

International Trade

Q.1:     What is meant by domestic trade?

Ans:     The trade that takes place between the individuals living in the same country is called domestic or national or internal trade.

Q.2:     What is meant by international trade?

Ans:     The trade that takes place between the inhabitants of two countries or the trade that takes place among the individuals living in different countries of the world is called international trade.

Q.3:     What is meant by the balance of trade?

Ans:     The systematic record of the money value of visible imports and visible exports of a country in one year is called the balance of trade.

Q.4:     What is meant by the balance of payment?

Ans:     The systematic record of visible and invisible exports and imports of a country in one year is called balance of payment.

Q.5:     What is the objective of the establishment of the International Monetary Fund?

Ans:     The objective of the establishment of IMF is to maintain the balance of payment of its member countries. This organization provides foreign exchange to improve the balance of payment of its members.

Q.6:     Write down advantages of international trade.

Ans:     1) Acquisition of foreign goods

2) Availability of goods in case of shortage

3) Export of surplus production

4) International peace

5) Removal of monopolies

Q.7:     Write down disadvantages of international trade.

Ans:     1) Dependence on the production of Limited goods

2) Dependence on other countries

3) International effects of inflation

4) Monopoly of developed countries

5) Supply of goods injurious to health

Q.8:     Which are visible items of balance of payment?

Ans:     1) Expenditure on education in foreign countries

2) Expenditure on treatment in foreign countries

3) Expenditure on tourism

4) Expenditure on political, cultural and trade delegates

5) Expenditure on political issue

6) Expenditure on foreign loans

Q.9:     What is meant by current account of balance of payment?

Ans:     Account of exports and imports of general goods and services is called current account of balance of payment.

Q.10:   Define terms of trade.

Ans:     The rate at which commodities are exchange with each other in the international trade is called terms of trade.

Q.11:   Write down the formula for terms of trade.

Ans:     terms of trade = PX/PM  x 100

Q.12:   Write down the advantages of globalization.

Ans:     1) Use of better technology

2) Availability of better quality goods

3) Rapidness in developmental works

4) Arising of the atmosphere of brotherhood

Q.13:   Write down advantages of W.T.O.

Ans:     1) Peaceful solution of train differences

2) Elimination of taxes on transportation

3) Guarantor of peace and safety

4)  Cheap provision of necessities of life

Q.14:   Write down disadvantages of W.T.O.

Ans:     1) Unfavorable economic conditions

2) Provision of commodity injurious to health

3) Decrease in reserve of foreign exchange

4) Obstacle in the way of setup of new industries

Q.15:   What is meant by surplus palace of trade?

Ans:     If a country visible goods exports having more value than that of visible goods imported by it the balance of trade is said to be surplus or favorable.

Q.16:   What is meant by deficit or unfavorable balance of trade?

Ans:     If the value of visible exports of a country is less than the value of its visible imports, then its balance of trade will be deficit or unfavorable.

Q.17:   What is meant by surplus or favorable balance of payment?

Ans:     If a country exports its visible and invisible goods of more value than the value of its imports of visible invisible goods, then its balance of payment will be surplus or favorable.

Q.18:   What is meant by deficit or unfavorable balance of payment?

Ans:     If a country exports its visible and invisible goods of less value then the value of its imports of visible and invisible goods then, its balance of payment will be deficit or unfavorable.

Q.19:   Write four causes of deficit balance of payment.

Ans:     1) Decrease in exports

2) Increase in imports

3) Unfavorable terms of trade

4) Inflation

Q.20:   Write down four ways to improve balance of payment.

Ans:     1) Increase in Exports

2) Decrease in imports

3) Devaluation in currency

4) Decrease in quantity of money

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