44) A(n) has no barriers to trade between member countries, includes a eommon 44
ID: 349751 • Letter: 4
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44) A(n) has no barriers to trade between member countries, includes a eommon 44) external trede policy, and allows factors of production to move freely between A) common market C) customs union D) full political union 45) Aecording to the view of FDI, MNEs extract profits from the host country 45) and take them to their home country, giving nothing of value to the host eountry in exchange. A) radical B) conservativeC) imperialist D) free market 46) Which of the following arises when a country is exporting more goods and services than it is importing? A) Current account surplus C) Trade balance B) Trade deficit D) Trade surplus 47) 47) According to the argument, governments should temporarily support new industries until they have grown strong enough to meet international competition A) infant industry C) retaliatory action B) human rights D) antidumping 48) A(n) entails even closer economic integration and cooperation than a common market. A) economic union C) full political union B) customs union D) free trade area 49) A(n) involves the free flow of products and factors of production between 49) member countries, the adoption of a common external trade policy, a common currency harmonization of members' tax rates, and a common monetary and fiscal policy A) free trade area C) common market B) economic union D) customs union 50) When a company brings capital and/or technology to a host country, the host country 50) benefits from the: A) bandwagon effect of FDI. C) resource-transfer effect of FDI B) balance-of-payments effect of FDI D) political effect of FDIExplanation / Answer
Ans 44) Option A: Common Market
Regional Integration Cooperation agreements are agreed and signed by different nations to faciliate inter-exchange of goods, services and intellectual know-how. The first level of this integration is known as Common market in which trade between member countries involves common external trade policy and allows factors of production to move freely.
Ans 45) Option A: Radical View
The Radical view, often termed as the Marxist view of FDI was much popular before World war II and it advocated the harmful effects of FDI on any nation to the extent of saying that it is the novel way of re-introducing economic slavery. Countries to be treated as colonies by plundering away the wealth and leaving very little for host nation's growth.
Ans 46) Option A: Current account surplus
Current account surplus refers to the excess of country's export of goods and services over import of goods and services in a financial year. It is the most desired state of affairs for any nations balance of payment status. It indicates the credit worthiness of the country in International markets along with self reliance and less dependence on imports.
Ans 47) option A: Infant industry
Infant industry refers to the lifecycle stage of any industry after its conception and introduction. Areas where local manufacturing is absent and reliance for demand fulfilment is based on imports, Governments are expected to step in and help these small manufacturers to boost the sale of indigenous product and services by giving tax sops or tax holidays, thereby bringing the cost of manufacturing down and creating level playing ground for competition.
Ans 48) Option A: Economic Union
Economic Union entails a closer economic integration and cooperation than common market as it involves the adoption of same currency as medium of transaction to facilitate better trade among the trading member countries thus removing exchange rate fluctuations as a barrier. Eg: European Union adopted Euro as a common currency.
Ans 49) Option B: Economic Union
Economic Union entails a closer economic integration and cooperation than common market as it involves the adoption of same currency as medium of transaction to facilitate better trade among the trading member countries thus removing exchange rate fluctuations as a barrier. Eg: European Union adopted Euro as a common currency.
Ans 50) Option C: Resource Transfer effect of FDI
Resource Transfer effect of FDI is one of positive effects of FDI wherein a company brings capital / technology to the host nation. The host nation which lacks in this sphere can now utilise these resources to advance its own economy.
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