Question 1

If a country has fundamental deficit in in the balance of payments, it should resort to

Accepted Answer

A) Exchange control 
B) Devaluation of its currency 
C) Inflation 
D) Loans

Question 2

A tariff or custom quota may either be

Accepted Answer

A) Increasing or decreasing 
B) Fixed or variable 
C) Unilateral or bilateral 
D) Autonomous or agreed

Question 3

Which of the following items is not included in the invisible items of balance of payments?

Accepted Answer

A) Shipping 
B) Insurance 
C) Export and import of goods 
D) None of the above

Question 4

Capital account includes

Accepted Answer

A) Invisible export 
B) Long-term capital transaction 
C) Invisible import 
D) All of the above

Question 5

Once import quota is levied on a commodity, the domestic price of the commodity

Accepted Answer

A) Fluctuates 
B) Remains constant 
C) Decreases 
D) Rises

Exam 5: Understanding Tariffs and Quotas in International Trade

If a country has fundamental deficit in in the balance of payments, it should resort to