In the Civil Services IAS Exam, the questions of GS Indian Economy play a crucial role for the aspirants to crack the IAS Exam. In the past few years the relevance of questions based on Indian Economy has been increased in IAS Prelims Exam while there is always a greater possibility of asking many more questions. So, an aspirant should have to be prepared for such questions based on Indian Economy.
Here, we have provided Multiple Choice Questions based on the eight chapter of Economic Survey 2015-16: Preferential Trade Agreements
Q1. In which of the following year WTO was established?
A.January 1, 1994
B.January 1, 1995
C.January 1, 1996
D.January 1, 1997
Answer: B
Explanation: The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.
Q2. Consider the following forms of Preferential Trade Agreements (PTAs):
I.Partial Scope Agreement (PSA
II.Free Trade Agreement (FTA)
III.Customs Union (CU)
Which of the followings is/are among the forms of Preferential Trade Agreement?
A.Only I
B.I and II
C.I and III
D.All of the above
Answer: D
Explanation: Preferential Trade Agreements (PTAs) have been proliferating, especially since the establishment of the World Trade Organisation (WTO) in 1994. As of 1st December 2015, the WTO had received notifications of no less than 619 PTAs (disaggregated by goods, services, or accessions), of which 413 were already in force.
Q3. Which of the following statements is correct regarding Partial Scope Agreement (PSA)?
A.An agreement which is only partial in scope, meaning it allows for trade between countries on a small number of goods.
B.A preferential arrangement in which members reduce tariffs on trade among themselves, while maintaining their own tariff rates for trade with non members.
C.A free-trade agreement in which members apply a common external tariff (CET) schedule to imports from non members.
D.The market where movement of factors of production is relatively free amongst member countries.
Answer: A
Explanation: Preferential Trade Agreements (PTAs) have five distinguish forms with each subsequent arrangement being a deeper form of integration, requiring more coordination and a greater loss of autonomy.
Q4. What is Economic Union?
A.A common market where movement of factors of production is relatively free amongst member countries.
B.A common market where movement of factors of production is restricted amongst member countries.
C.A common market where member countries coordinate macro-economic and exchange rate policies.
D.A common market where member countries coordinate macro-economic policies never cooperate exchange rate policies.
Answer: C
Explanation: An economic union is a common market where member countries coordinate macro-economic and exchange rate policies.
Q5. Which of the following statements is correct regarding Free Trade Agreement (FTA)?
A.An agreement which is only partial in scope, meaning it allows for trade between countries on a small number of goods.
B.A preferential arrangement in which members reduce tariffs on trade among themselves, while maintaining their own tariff rates for trade with non members.
C.A free-trade agreement in which members apply a common external tariff (CET) schedule to imports from non members.
D.The market where movement of factors of production is relatively free amongst member countries.
Answer: B
Explanation: A free trade agreement is a preferential arrangement in which members reduce tariffs on trade among themselves, while maintaining their own tariff rates for trade with non members.
Q6. Which of the following is correct regarding Custom Union?
A.A market where movement of factors of production is relatively free amongst member countries.
B.A market where movement of factors of production is restricted amongst member countries.
C.A market where member countries coordinate macro-economic and exchange rate policies.
D.The free-trade agreement in which members apply a common external tariff (CET) schedule to imports from non members.
Answer: D
Explanation: A customs union (CU) is a free-trade agreement in which members applies a common external tariff (CET) schedule to imports from non members where an economic union is a common market where member countries coordinate macro-economic and exchange rate policies.
Q7. India has signed bilateral Free Trade Agreements (FTAs) with several Asian economies but which one of following Asian country India never signed a bilateral Free Trade Agreements (FTAs) with?
A.Sri Lanka
B.China
C.Afghanistan
D. Thailand
Answer: B
Explanation: Within Asia, India has signed bilateral FTAs with Sri Lanka (1998), Afghanistan (2003), Thailand (2004), Singapore (2005), Bhutan (2006), Nepal (2009), Korea (2009), Malaysia (2011) and Japan (2011). India and China have Free Trade Agreements under consideration.
Q8. Within Asia India have two regional trade Agreement, one among them is with:
A.South Asian Free Trade Agreement
B.Nepal
C.Chile
D.MERCOSUR
Answer: A
Explanation: Within Asia, India has signed bilateral FTAs with Sri Lanka (1998), Afghanistan (2003), Thailand (2004), Singapore (2005), Bhutan (2006), Nepal (2009), Korea (2009), Malaysia (2011) and Japan (2011). There have also been two regional trade agreements, the South Asian Free Trade Agreement (SAFTA, 2004) and the India-Association of Southeast Asian Nations Agreement (ASEAN, 2010).
Q9. Outside Asia India’s Free Trade Agreements have been agreed with which of the following country?
A.USA
B.Russia
C.Chile
D.Australia
Answer: C
Explanation: There have also been two regional trade agreements, the South Asian Free Trade Agreement (SAFTA, 2004) and the India-Association of Southeast Asian Nations Agreement (ASEAN, 2010). Outside Asia, FTAs have been agreed with Chile (2006) and MERCOSUR (2004).
Q10: Which of the following is correct regarding Common Market (CM)?
A.A market where movement of factors of production is relatively free amongst member countries.
B.A market where movement of factors of production is restricted amongst member countries.
C.A market where member countries coordinate macro-economic and exchange rate policies.
D.The free-trade agreement in which members apply a common external tariff (CET) schedule to imports from non members.
Answer: A
Explanation: A common market is a customs union where movement of factors of production is relatively free amongst member countries whereas the economic union is a common market where member countries coordinate macro-economic and exchange rate policies.
Q11. Which among the following countries is not a member of Trans-Pacific Partnership (TPP)?
A.Australia
B.India
C.Canada
D.Chile
Answer: B
Explanation: Trans-Pacific Partnership (TPP) is among the two major mega regionals which has been signed but not yet ratified by member countries and it comprises twelve member countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam, as shown in the map below. The TPP will cover 40 percent of global GDP and 33 percent of world trade.
