Question

Please solve the final answer for all following 10 multiple choice questions

1. A form of PTA (Preferential Trade agreement) where member countries remove trade barriers among themselves, and form common barriers among non-members:

O Free Trade Area (FTA)

O Customs Union (CU)

O Common Market (XM)

O Economic Union (EU)

O All of the above

2. The exchange rate of Euro to US dollar (/$) yesterday was 1/$1.13728. Last week the rate was 1/ $1.37258. Which one is true comparing this week with last week?

O Dollar is depreciated

O Dollar is appreciated

O Both currencies are appreciated

O Euro is depreciated

O B and D

3. In the past (more than now),UAE concentrated on the production and trade of oil and gas sector for as a source of its economic growth. UAE, then, followed:

O Import-Substitution Development Strategy

O Outward-looking Development Strategy

O Primary Export-led Development Strategy

O All of the above

4. Why do the demand for and supply of foreign currencies change?

O It is not well known why this happens

O There is no explanation for this

O Because demand for and supply of Forex stem form a demand for trade of goods and services

O No answer

5. Related to trade and environmental protection there is an argument that due to lack of environmental standards and regulations in some developing countries, some companies may escape or migrate to such countries to produce and trade products that are not good for the environment. Such an argument is a major objection that hinders lowering trade barriers. It also known as:

O Tax havens hypothesis

O Pollution havens hypothesis

O Trade protection hypothesis

O Problems of trade barriers Question 1

6. Tariff and export subsidy are forms of trade barrier. However, tariff and export subsidy have some differences in effects. Why?

O Tariff generates production deadweight cost and consumption deadweight cost while subsidy does not

O Subsidy generates production deadweight cost while tariff does not

O Unlike tariff, export subsidy with a free trade does not cause consumption deadweight cost since goods are sold at the world price;

O All the effects of tariff and export subsidy are similar

O No answer

7. The Government Revenue argument is one reason for trade protection or barrier. It is mainly practiced by:

O Governments of developed countries

O All developed and developing countries

O Governments of developing countries

O USA and Japan

8. Subsidy (government support for traded products) can be done in one of the following forms:

O Tax rebates (tax refund)

O Subsidized loans to foreign purchasers

O Insurance guarantees

O Funding for research & development

O All of the above

9. One is an international organization that sets policies and laws for international trade:

O The Doha Round

O The World Health Organization (WHO)

O World Trade Organization (WTO)

O The World Bank

O International Monetary Fund (IMF)

10. A direct or indirect payment by a country s government to one or more of its export industries is:

O Quota

O Import subsidy

O Export subsidy

O Tariff

O Government tax paid to private industries

Answer 1

1. A form of PTA (Preferential Trade agreement) where member countries remove trade barriers among themselves and form common barriers among non-members:

- Customs Union (CU)

(custom union allows the members of the PTA to follow free trade policy and follows a common external trade policy for the non-members)

2. The exchange rate of Euro to US dollar (/$) yesterday was 1/$1.13728. Last week the rate was 1/ $1.37258. Which one is true comparing this week with last week?

- B and D

(In the above case, the Euro is depreciating and the US dollar is appreciating.)

3. In the past (more than now), UAE concentrated on the production and trade of oil and gas sector as a source of its economic growth. UAE, then, followed:

- Primary Export-led Development Strategy

(Primary export-led development strategy or export substitute industrialization refers to the trade policy where the country exports the product in which it has a competitive advantage for its development and growth. UAE is rich in oil and gas resources hence using it for trade is following this strategy.)

4. Why do the demand for and supply of foreign currencies change?

- Because demand for and supply of Forex stem from a demand for the trade of goods and services.