Which of the following is NOT a Trade Barrier?
- A.Subsidies
- B.Embargo
- C.Export Security
- D.Tariff Barriers
Correct answer
Explanation
The correct answer is C, Export Security. Export security is not a recognised category of trade barrier; it is not a device that restricts the movement of goods across a border. Option A is wrong as a choice because subsidies are treated as a barrier: by lowering the cost of domestic producers they make imported goods uncompetitive, and the World Trade Organization disciplines them for that reason. Option B is wrong because an embargo is the strongest of all barriers, an outright ban on trade with a particular country or in a particular good. Option D is wrong because tariff barriers, chiefly customs duty, are the classic barrier, raising the price of the imported good in the home market. Keep the two families apart: tariff barriers act on price, while non-tariff barriers such as quotas, embargoes, licensing and standards act on quantity or on entry itself.
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 →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.
Read the full explanation →In which year did India adopt full convertibility of the rupee on the current account?
- A.1991
- B.1994
- C.1997
- D.2000
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In August 1994 India accepted the obligations of Article VIII of the International Monetary Fund and made the rupee fully convertible on the current account, so that foreign exchange for trade, travel, education and remittances could be obtained freely at the market rate.
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