Question

Question 10

‘Government Revenue Argument’ is one reason or argument for having a trade protection. It is mainly used by:

		a) all countries - developed and developing
		b) the governments of developed countries
		c) the governments of developing countries
		d) the USA and Europe

Question 11

Which trade strategy for economic development is adopted by countries?

		a) Primary Export-led Development Strategy
		b) Import-Substitution Development Strategy
		c) Outward-looking Development Strategy
		d) All of the above

Question 12

The international process whereby skilled workers leave their homeland and relocate abroad in other foreign countries is termed as

		a) Internal migration
		b) Brain drain
		c) Brawn Drain
		d) All

Question 13

Suppose that Euro depreciates against a USA dollar. Which action would be taken by the European Central Bank in order to keep the exchange rate of Euro to US dollar at a required level?

		a) The European central bank takes no action
		b) Sell Euro to the forex market to increase its supply
		c) Buy Euro from the forex market to reduce it supply
		d) Sell US dollars to the forex market and increase the supply of dollar

Answer 1

Solution:

10: Option C
Trade protection can be used by many countries but it is mostly used by developing countries citing government revenue as the prime concern. Trade protection allows the infant industries in the developing countries to grow and hence it allows the government to increase their revenue. Hence, developing countries more often use trade protection citing government revenue increase as the reason.

11: Option D
All the strategies mentioned are responsible or are used for the development of the economic status of the country. A nation can develop economically by either exporting or substituting their imports by domestic production and allowing for more exports from the country. Hence, all the mentioned strategies are used for increasing the economic growth of the countries.

12: Option B
The shift of labor from one country to another is very popularly termed as Brain Drain. Hence, option B is correct.

13: Option C
When the Euro depreciates, the EU central bank will buy the Euro from the forex market to reduce the supply of Euro's in the forex market thus creating the demand for Euros and hence increasing the values of Euros again. Hence, Option C is correct.