The World Trade Organization, established on 1 January 1995, replaced which body?
- A.International Monetary Fund
- B.General Agreement on Tariffs and Trade
- C.United Nations Conference on Trade and Development
- D.World Bank
Correct answer
Explanation
The correct answer is B, the General Agreement on Tariffs and Trade. GATT was signed in 1947 as a provisional agreement on tariff reduction, and after the Uruguay Round it was replaced on 1 January 1995 by the World Trade Organization, a permanent body with headquarters at Geneva and a binding dispute settlement system. India is a founder member. Option A is wrong because the International Monetary Fund, created at Bretton Woods in 1944, deals with exchange rates and balance of payments support and continues to exist. Option C is wrong because UNCTAD, set up in 1964, is a United Nations body that speaks for developing countries on trade and development and was never replaced. Option D is wrong because the World Bank, also born at Bretton Woods, lends for development projects and is a separate institution. The WTO agreements to remember are TRIPS, TRIMS, GATS and the Agreement on Agriculture.
Read the full article: Balance of Payments and Foreign Trade: Key Concepts
Practice Questions
View allThe Balance of Payment Account of an economy is related to the ________.
- A.agriculture sector
- B.external sector
- C.government sector
- D.private sector
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The balance of payments is the statement that records every economic transaction between the residents of a country and the rest of the world in a given period, which is precisely what the external sector of an economy means; it covers merchandise trade, services, income, transfers and capital flows.
Read the full explanation →Which of the following is NOT a Trade Barrier?
- A.Subsidies
- B.Embargo
- C.Export Security
- D.Tariff Barriers
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Export security is not a recognised category of trade barrier; it is not a device that restricts the movement of goods across a border.
Read the full explanation →What are the two main forms of protection used to shield domestic industries from foreign competition in an inward looking trade strategy?
- A.Tariffs and subsidies
- B.Quotas and subsidies
- C.Tariffs and price controls
- D.Tariffs and quotas
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An inward-looking trade strategy, better known as import substitution, was the policy India followed from the Second Five Year Plan until 1991, and it rested on two instruments.
Read the full explanation →What is an indicator of self-reliance?
- A.Increase in imports of the goods which could be produced in the country.
- B.Avoiding imports of the goods which could be produced in the country.
- C.Increase in exports of the goods which could not be produced in the country.
- D.Avoiding exports of the goods which could be produced in the country.
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Self-reliance, the goal set out in India's early plans, means building the capacity to produce at home what the country would otherwise have to buy abroad, so the true indicator is that imports of such goods are avoided.
Read the full explanation →The balance of trade of a country includes which of the following?
- A.Only exports and imports of goods
- B.Exports and imports of goods and services
- C.All current and capital account transactions
- D.Only foreign investment flows
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The balance of trade, also called the merchandise or visible balance, is the difference between the value of goods exported and goods imported; nothing else enters it.
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