BBA 3rd Year Foreign Trade And Economic Growth Very Short Question Answer Last 3 Year examination papers solved Unit – Wise content Book Code-604
(Very Short Answer Questions) (2014)
Q.1. What is meant by balance of payments?
Ans. The balance of payments is an accounting system that records the economic transactions between the residents and government of a particular country. In other words, the balance of payment statements is a device for recording all the economic transactions within a given period between the residents of one country and the rest of the world.
Q.2. Give any two criticisms of balance of payments theory.
Ans. Balance of payments theory suffers from certain drawbacks:
(a) Based on the unrealistic assumption of perfect
(b) This theory ignores the internal price level.
Q.3. What are the main causes of unfavourable balance of payments in India?
Ans. The main causes of unfavourable balance of payments in India are:
(a) Prime disequilibrium.
(b) Increase in the price of petrol.
(c) Foreign competition.
(d) Import of war equipments.
Q.4. What do you mean by term Balance of Trade (BOT)?
Ans. The balance of trade forms a part of the current account, which also includes other transactions such as income from the international investment position as well as international help.
Q.5. Give the names of the factors that can affect the balance of trade.
Ans. Following factors can affect the balance of trade:
(a) Price of goods manufactured at home.
(b) Exchange rates.
(c) Trade agreement or barriers.
(d) Business cycle at home or abroad.
Q.6. Give the various components of Balance of Payments (BOP).
Ans. Main components of balance of payments are:
(a) Current account.
(b) Capital account.
(c) The official reserve account.
0.7. What is the main difference between balance of payments and balance of trade?
Ans. There is a marked distinction between the two concepts balance of trade and balance of payments. Balance of payments is a wider concept than balance of trade. In fact, balance of payments includes in its structure the nation of balance of trade.
Q.8, What do you understand by foreign trade? (2014)
Ans. Foreign trade is the exchange of capital, goods, and services across international borders or territories.
Q.9. What do you understand by disequilibrium in balance of payments?
Ans. When the supply of foreign currency is more than that of the demand for the foreign currency, both the surplus or defecit position represent the disequilibrium of payment,
Q.10. What is economic growth?
Ans. Economic growth is the increase in the market value of the goods and services produced by an economy over time.
Q.11. Give the definition of economic growth.
Ans. Economic growth may be defined as “It is usually associated with technological changes”.
Q.12. What is economic growth rate?
Ans. The economic growth rate provides insight into the general direction and magnitude of growth for the overall economy.
Q.13. What do you understand by free trade? (2015)
Ans. Free trade policy implies absence of any artificial restriction on or obstacle to the freedom of trade of a country with other nations.
According to Adam Smith, the term “free trade” is used to denote “that system of commercial policy which draws no distinction between domestic and foreign commodities and, therefore, neither imposes additional burdens on the latter, nor grants any special favour to the forms. In other words, free trade implies complete freedom of international exchange. Under such a policy there are no barriers to the movement of goods among countries and exchange can take its perfectly natural course.