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