20+ Commercial Policy MCQ’s | (Free Resource) Business Economics

Commercial Policy MCQ

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1. Which one of the following is not an objective of commercial trade policy?
(a) To preserve foreign exchange reserves
(b) To determine the rate of interest
(c) To protect domestic industries from foreign competition
(d) To maintain favourable balance of payments

2. Which one of the following is an argument for free trade?
(a) Protects domestic industries
(b) Promotes self sufficiency
(c) Helps diversification of industries
(d) Promotes efficient allocation of world resources

3. Which of the following is an argument against the policy of free trade?
(a) Does not always benefit less developed countries
(b) Protects inefficient industries
(c) Causes unemployment in the export sector
(d) Harms domestic consumers

4. Protectionist policy 
(a) Encourages international specialization
(b) Promotes global production
(c) Helps prevent dumping
(d) Reduces government intervention in trade

5. Tariff rate quotas are 
(a) combination of tariffs and quotas
(b) based on the value of the traded commodity only
(c) based on the quantity or volume of the quantity only
(d) low tariff rate on an initial quantity of import within the quotalimit and very high tariff rate on imports above the initial amount

6. A tariff expressed as either a specific or an ad valorem rate, whichever is higher, is known as 
(a) General tariff
(b) Mixed tariff
(c) Compound tariff
(d) Countervailing tariff

7. Countervailing tariffs specifically aim to 
(a) give preference to imports from a customs union
(b) retaliate to a tariff imposed by a trading partner
(c) neutralize the effects of subsides given to the producers in the exporting countries
(d) counter dumping by other countries

8. A system that makes it mandatory for domestic producers to use someproportion of domestic raw material is known as 
(a) Mixing quota
(b) Global quota
(c) Allocated quota
(d) Import licensing

9. Which of the following is not a NTB?
(a) Voluntary export restrictions
(b) Local content requirement
(c) Administrative barriers
(d) Tariff rate quotas

10. Which one of the following NTBs prevents free movement of capital between countries?
(a) Preferential government procurement
(b) Exchange controls
(c) Domestic subsidies
(d) Local content requirement

Answers: 1)To determine the rate of interest 2)Promotes efficient allocation of world resources 3)Does not always benefit less developed countries 4)Helps prevent dumping 5)low tariff rate on an initial quantity of import within the quota limit and very high tariff rate on imports above the initial amount 6)Mixed tariff 7)neutralize the effects of subsides given to the producers in the exporting countries 8)Mixing quota 9)Tariff rate quotas 10)Exchange controls

11. The reduction in domestic consumption due to imposition of quotaresults in 
(a) increase in government revenue
(b) increase in consumer’s surplus
(c) loss of social welfare
(d) increase in social welfare

12. A preferential trade area is a trade bloc where 
(a) countries agree to reduce or eliminate tariff barriers on all goods imported from other member nations
(b) countries agree to reduce or eliminate tariff barriers on selected goods imported from other member nations
(c) countries agree to have a common unified tariff against non members
(d) all barriers are eliminated to allow free movement of goods,services, capital and labour

13. A free trade area is a trade bloc where 
(a) countries agree to reduce or eliminate tariff barriers on all goods imported from other member nations
(b) countries agree to reduce or eliminate tariff barriers on selected goods imported from other member nations
(c) countries agree to have a common unified tariff against non members
(d) all barriers are eliminated to allow free movement of goods,services, capital and labour

14. A customs union is a trade bloc where 
(a) countries agree to reduce or eliminate tariff barriers on all goods imported from other member nations
(b) countries agree to reduce or eliminate tariff barriers on selected goods imported from other member nations
(c) countries agree to have a common unified tariff against non members
(d) all barriers are eliminated to allow free movement of goods,services, capital and labour

15. A common or single market is a trade bloc where 
(a) countries agree to reduce or eliminate tariff barriers on all goodsimported from other member nations
(b) countries agree to reduce or eliminate tariff barriers on selectedgoods imported from other member nations
(c) countries agree to have a common unified tariff against nonmembers
(d) all barriers are eliminated to allow free movement of goods,services, capital and labour

16. is one of the disadvantages of international economicintegration.
(a) cross-border investment flows
(b) employment generation
(c) increasing interdependence
(d) conflict resolution

17. The was signed to create the EU in 1993.
(a) Treaty of Maastricht
(b) Treaty of Rome
(c) Treaty of Lisbon
(d) Treaty of London

18. The euro replaced the national currencies of 12 EU member nationsin the year 
(a) 1997
(b) 2002
(c) 2000
(d) 1995

19. The functioning of the EU single market in governed by 
(a) Treaty of Rome
(b) Treaty of Amity and Cooperation
(c) European Financial Stability Facility
(d) Treaty of the Functioning of European Union

20. The Eurozone crisis was essentially a crisis.
(a) Immigration
(b) Food
(c) Sovereign debt
(d) Political

Answers: 11)loss of social welfare 12)countries agree to reduce or eliminate tariff barriers on selected goods imported from other member nations 13)countries agree to reduce or eliminate tariff barriers on all goods imported from other member nations 14)countries agree to have a common unified tariff against non members 15)all barriers are eliminated to allow free movement of goods,services, capital and labour 16)increasing interdependence 17)Treaty of Maastricht 18)2002 19)Treaty of the Functioning of European Union 20)Sovereign debt

21. ASEAN was formed in
(a) 1967
(b) 1945
(c) 1999
(d) 2000

22. The was established in 2015 to bring about economic integrationto create a single market in ASEAN.
(a) ATIGA
(b) AEC
(c) AFTA
(d) ABIF

23. The aim of ABIF is to establish 
(a) Banking integration in ASEAN
(b) Food security in ASEAN
(c) Free labour market in ASEAN
(d) Customs union in ASEAN

Answer: 21)1967 22)AEC 23)Banking integration in ASEAN