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Business Economics
IMP question’s with Point’s
1. Explain Limitation of Ricardian theory :[NO COMPANIES]
1. N-No free Trade
2. C-Complete specialization
3. C-Commodity i.e.Two countries and Two commodities
3. M- Mobility of factors of production
4. P-Perfect competition
5. A-Absence of transport cost
5. N-- Not Applicable to the developing countries
6.S-Static theory
2. Explain limitation of Hecksher ohlin theory [US COLD]
1.U-Unrelaisitc assumption
2. Static in nature
3. Commodity prices neglected
4. Other factors neglected
5. Leontief paradox
6. Demand condition neglected
3. Discuss the arguments in favour of and against free trade policy [CNG PER Q]
1. C-Concentrates on price rather than income
2. N-Neglacted productivity of inputs
3. P-Problems associated with the concentration of index number
4. Q-Quality neglected
4. Explain factors affecting terms of trade[DEFENSE TIME ]
1. D-Depreciation of currency
2. E-Economic development
3. F-Factors of changes endowment
4. N-Nature of commodity
5. T-Taste changes
6. T-Tariff
7. I-Improvement of technology
8.M-Mutual (Reciprocal) Demand
5. What is commercial policy ? what are its primary objectives ?[TO]
1. To Increase volume of trade
2. To promote export
3. To expand production of goods
4. To protect the newly formed strategically industries
5. To increase foreign exchange
6. To Restrict imports
7. To maintain balance of payment
8. To enter into trade agreement
6. Explain factors affecting terms of trade[NO CONTROL]
1. N-Nature of trade
2. C-Cost Ratio
3. N-Nature of Trade
4. R-Reciprocal demand
5. L-Level of Income

7. Explain factors determining the gain [HI2DE]

1. H- Higher economic welfare
2. I- Increase in world production
3. I-Increase in Consumption
4. D- Dynamic gains

8. Explain Types of Tariff

1.On the basis of Origin Destination [SAME CITY]
1. S-Specific duty
2. A-Advalorem tariff
3. M-Mixed tariff
4. C-Compound tariff
2. On the basis of purpose [RP]
1. Revenue tariff
2. Protective tariff
3. On the basis of sources of imports [MP DON]
1. M- Maximum and minimum tariff
2. P- Preferential tariff
3. D-Discriminatory tariff
4. N-Non Discriminatory tariff
4. On the basis of Retaliation [ RACE]
1. R- Retaliatory tariff
2. A-Anti dumping tariff
3. C- Countervailing tariff
9. Discuss the structure of balance payment [TCS OFFICE]
1. T- Trade account
2. T-The basic balance
2. C-Current Account
3. C-Capital Account
4. S-Statistical (error and omission)
5. O-Overall balance
6. F-Foreign Exchange reserve
7. E-Equilibrium and Disequilibrium
10. Explain Types non-tariff barriers [I M BUT]
1. I- Import licensing
2. M-Mxing quotas
3. B-Bilateral Quotas
4. U-Unilateral Quotas
5. T-Tariff Quotas
11. Explain Effects of Imports Quotas
[TPCR]
1. T-Terms of trae effect
2. P-Price effect
3. P-production effect
4. C-Consumption and welfare effect
5. R-Redistribution effect

12. Explain Other non tariff barrier [IDEAL VIP]

1. I- Intellectual property laws
2. D-Domestic subsidies
3. E-Exchange controls
4. A-Administrative barriers
5. L-Local content requirement
6. V-Voluntary export restraint
7. P-Prefrential government procurement policy
8. P-Product testing standards
13.Write a short note on Reciprocal demand
[Short statement ]
1. Ricardian theory of international trade is based on cost of production
2. The exchange ratio internal and international level
3. It is strength and elasticity of one country’s demand for an other country’s commodity
4. Assumption
a. Two countries
b. Two commodities
c. No transport cost
d. Market operates under perfect competition

14. What is commercial trade policy ? what are its primary objectives?
[DESKTOP ICW]
1. D-Development infrastructure
2. E-Expansion of market size and economic scale
3. E-Employment generation
4. E-Efficiency
5. T-Technology sharing
6. P-Political cooperation and conflict resolution
7. I-Increasing competition
8. C-Cross boarder investment flows
9.W- Wider choice of goods and services
15. Explain Types pf international economic integration
[PCFCME]
1. P-Preferential trade area
2. C-Customs union
 3. F-Full Economic union
4. F-Fiscal union
5. C-Common market or single market
6. C-Complete economic integration
7. M-Monetary union
8. E-Economic and monetary union
16. What are the reason for Britain existing (Brexit) the European union ?
[LIE]
1. L-Loss of sovereignty
2. I-Immigration
3. E-Economic Opportunity
3. E-EU contribution
17. Explain four freedom of the single market
[F4]
1. Free movement of goods
2. Free movement of capital
3. Freedom to establish and provide services
4. Free movement of persons
18. Explain objectives of economic integration [DESKTOP WORK IC ]
1. D- Development infrastructure
2. E-Expansion of market size and economic of scale
3. E-Efficiency
4. E-Employment competition
5. T-Technology sharing
6. p-Political corporation
7. w-Wider range
8. R-Reduction trade cost
9. I- Increasing competition
10. C-Cross boarder investment flows

19. Explain the concept of regionalism and multilateralism in international trade

Multilateralism –
a. Multilateralism refers to the alliance of multi countries
b. It Started with the signing of the General agreement on Tariff and Trade (GATT) and (WTO)
c. WTO developed by the GATT agreement into boarder areas to include trade in services
Regionalism and Trade blocs
a. Regionalism nations come together from regional trade agreement on the basis of their
geographical location
b. Trade blocs are usually groups of countries in specific regions that manage promote trade in a
region
c. NAFTA , SAFTA CACM , ASEAN .
Regionalism and Trade blocs
a. Sometimes nations come together to from regional trade agreement on the basis of their
geographical location
 b. Trade agreement offer each more favorable treatment in trade
c. trade blocs usually group of countries in specific regions that manage and promote trade in
region
d. Trade blocs North American Free Trade Agreement [NAFTA]
e. Central American Common Market[CACM]

20. What are the reason for Britain existing (Brexit) the European union ?[LIE]
1. L-Loss of Sovereignty
2. I-Immaginary
3. E-EU Contribution
4. E-Economic opportunity

21. Explain the causes of balance of payment disequilibrium

a. Increase in payment [High DP]
1. High income and price elasticity of demand
2. I- Import of essential goods and services
3. D-Development programs
4. D-Demonstration effect
5. P-Population growth
b. Low decline in export
[C NIL GDP’s]
1. C-Cyclical transmission
2. C-Capital flight
3. N-Natural calamities
4. I-Inflation
5. L-Low income elasticity if demand
6. G- Globalization
7. P-Protectionist trade policy
8. P-Political factors
9. S- Structural adjustments
22. Discuss the types of disequilibrium [SCL]
1.S- Short run
2. S-Structural
3. C-Cyclical
4.L- Long run
23. Discuss the structure of balance of payment of a country
[TCS FOREIGN]
1. T-Trade account balance
2. T-The basic balance
2. C-Current Account balance
3. C- Capital Account
4. S-Statistical discrepancy (Error and omission)
5. F-Foreign Exchange
6. O-Overall balance
7. E-Equilibrium and Disequilibrium
24. What is WTO ? On what principle does its function
Principle
[FOREIGN PRICE]
1. F-Free Trade
2. E- Encouraging development and Economic reforms
3. P-Promoting Fair competition
4. P-Predictability
5. N-Non -discrimination
Functions [APE]
1. A-Administrative functions
2. A-Administrative TPRM
2. P-Platform fore negotiation
3. E-Executive
4. E-Economic coherence
25. Explain brief WTO Agreement TRIP and TRIM and GATA
Short statement
a. The WTO Agreement cover goods, services and intellectual property
b. WTO agreement set procedure for settling disputes.
c. They prescribed for settling disputes.
d. They prescribed special treatment for developing countries.
TRIP
Short statement
a. The WTO agreement on Trade related aspects of intellectual property rights.
b. The result in price increases in area where IP protection
c.Better protection of favorable effect on the supply of innovation
d. Developing countries could benefit producers of new technology
e. Transfer of technology Research and development
TRIMs
 Short statement
a. Each member country is required to eliminate TRIM
b. Council for trade in goods may extend transition period
c. The property rights including copyrights, patent , trade mark
GATTs
Short statement
a. The general trade agreement on Trade services provides a set of multilateral rules
b. An obligation provide national treatment and market access to service suppliers pf other
members .
c. Members are free to decide which services will be subject to market access
26. Who are the participates in foreign exchange market bring out their role[RCF]
1. R-Retail clients
2. C-Commercial bank
3. C-Central bank
3. F-Foreign exchange dealers
3. F-Foreign exchange brokers

27. What are functions of foreign exchange market? [CPT]

1. C-Coverage of risk
2. P-provision of credit instrument and credit
3. T-Transfer of purchasing power
28. Discuss the factors influencing demand for supply of foreign exchange
Demand of foreign exchange
[FAILURE]
1.F- Future expectation
2. I-Import of goods
3. Import of services
4. U-Unilateral payments
5. E-Export of capital
Supply of foreign exchange
[FAILURE]
1.F-Future expectation
2. I-Import of services
3. U-Unilateral receipts
4. E-Export of goods
5. E-Export of services

29. Explain managed flexible exchange rate system in India [RD]

1. RBI intervention
2. Direct and Indirect intervention
30. Explain Net Barter terms of Trade
a. TC =Px1 ÷Pm1 x 100
Px0 Pm2

TC= Commodity terms of trade

P=Price index
X=Exports
1=Current year
0-Base year
Base year index is =100

31. Explain Gross barter Terms of trade

Gm =Qm1 ÷Qx1 x 100
Qm0 Qx10

Gm= Gross barter terms of trade

Qm= Physical quantity of imports
Qx= Physical quantity of exports
0=Base period
1=Current period