MCQ on Trade and Commerce
Q1. Which of the following is the apex institution for regulating foreign trade in India?
a) Reserve Bank of India (RBI)
b) Securities and Exchange Board of India (SEBI)
c) Directorate General of Foreign Trade (DGFT)
d) Ministry of Commerce and Industry
Show Answer
Correct Answer: c) Directorate General of Foreign Trade (DGFT)
Explanation: The Directorate General of Foreign Trade (DGFT) is the apex institution for regulating foreign trade in India. It functions under the Ministry of Commerce and Industry and is responsible for formulating and implementing foreign trade policies, granting licenses, and monitoring compliance with trade regulations.
Q2. Which of the following is the largest trading partner of India?
a) United States
b) China
c) European Union
d) United Arab Emirates
Show Answer
Correct Answer: b) China
Explanation: China is India’s largest trading partner, with bilateral trade between the two countries reaching significant levels. The trade relationship is characterized by a large trade deficit in favor of China, with India importing a wide range of goods, including electronics, machinery, and chemicals.
Q3. Which of the following is a major export item of India?
a) Petroleum products
b) Textiles
c) Gems and jewelry
d) Agricultural products
Show Answer
Correct Answer: c) Gems and jewelry
Explanation: Gems and jewelry is a major export item of India, contributing significantly to the country’s foreign exchange earnings. The sector includes the export of cut and polished diamonds, gold and silver jewelry, and colored gemstones.
Q4. Which of the following is a major import item of India?
a) Crude oil
b) Machinery
c) Electronic goods
d) Chemicals
Show Answer
Correct Answer: a) Crude oil
Explanation: Crude oil is a major import item of India, accounting for a significant share of the country’s total imports. India relies heavily on crude oil imports to meet its energy requirements, as domestic production is insufficient to meet the growing demand.
Q5. Which of the following is a primary objective of India’s foreign trade policy?
a) Promoting exports
b) Reducing trade deficit
c) Encouraging import substitution
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The primary objectives of India’s foreign trade policy include promoting exports, reducing trade deficit, and encouraging import substitution. The policy aims to boost the country’s foreign exchange earnings, promote economic growth, and enhance self-reliance.
Q6. Which of the following is a major component of India’s balance of payments?
a) Current account
b) Capital account
c) Official reserves
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The balance of payments is a statement that records all economic transactions between a country and the rest of the world. It consists of the current account (trade in goods and services, income, and current transfers), the capital account (capital transfers and acquisition/disposal of non-produced, non-financial assets), and the official reserves account (changes in foreign exchange reserves and other reserve assets).
Q7. Which of the following is a measure of the total value of goods and services produced within a country during a specific period?
a) Gross Domestic Product (GDP)
b) Gross National Product (GNP)
c) Net National Product (NNP)
d) Net National Income (NNI)
Show Answer
Correct Answer: a) Gross Domestic Product (GDP)
Explanation: Gross Domestic Product (GDP) is a measure of the total value of goods and services produced within a country during a specific period. It is an important indicator of a country’s economic performance and is used to compare the standard of living across different countries.
Q8. Which of the following is a measure of the total value of goods and services produced by a country’s residents, both within the country and abroad, during a specific period?
a) Gross Domestic Product (GDP)
b) Gross National Product (GNP)
c) Net National Product (NNP)
d) Net National Income (NNI)
Show Answer
Correct Answer: b) Gross National Product (GNP)
Explanation: Gross National Product (GNP) is a measure of the total value of goods and services produced by a country’s residents, both within the country and abroad, during a specific period. It includes Gross Domestic Product (GDP) and net factor income from abroad (income earned by residents from foreign investments minus income earned by non-residents from domestic investments).
Q9. Which of the following is a measure of the total income generated by a country’s residents after accounting for depreciation, indirect taxes, subsidies, and net factor income from abroad?
a) Gross Domestic Product (GDP) at factor cost
b) Gross National Product (GNP) at factor cost
c) Net National Product (NNP) at factor cost
d) Net National Income (NNI) at factor cost
Show Answer
Correct Answer: d) Net National Income (NNI) at factor cost
Explanation: Net National Income (NNI) at factor cost is a measure of the total income generated by a country’s residents after accounting for depreciation, indirect taxes, subsidies, and net factor income from abroad. It is calculated by subtracting depreciation and indirect taxes, adding subsidies, and adjusting for net factor income from abroad to Gross National Product (GNP).
Q10. Which of the following is a measure of the total income generated by a country’s residents after accounting for depreciation, indirect taxes, subsidies, and net factor income from abroad, expressed on a per capita basis?
a) Gross Domestic Product (GDP) per capita
b) Gross National Product (GNP) per capita
c) Net National Product (NNP) per capita
d) Net National Income (NNI) per capita
Show Answer
Correct Answer: d) Net National Income (NNI) per capita
Explanation: Net National Income (NNI) per capita is a measure of the total income generated by a country’s residents after accounting for depreciation, indirect taxes, subsidies, and net factor income from abroad, expressed on a per capita basis. It is calculated by dividing the Net National Income (NNI) at factor cost by the country’s population.
Q11. Which of the following is a major component of India’s services exports?
a) Travel services
b) Transportation services
c) Software services
d) Financial services
Show Answer
Correct Answer: c) Software services
Explanation: Software services are a major component of India’s services exports. The country has a strong presence in the global software industry, with a large pool of skilled professionals and a competitive cost advantage.
Q12. Which of the following is a major component of India’s services imports?
a) Travel services
b) Transportation services
c) Software services
d) Financial services
Show Answer
Correct Answer: b) Transportation services
Explanation: Transportation services are a major component of India’s services imports. The country relies on imports of transportation services, such as shipping and air transport, to facilitate its international trade.
Q13. Which of the following is a major destination for India’s exports?
a) United States
b) China
c) European Union
d) United Arab Emirates
Show Answer
Correct Answer: a) United States
Explanation: The United States is a major destination for India’s exports, with a significant share of the country’s total exports being directed to the US market. Key export items to the United States include gems and jewellery, textiles, pharmaceuticals, and software services.
Q14. Which of the following is a major source of India’s imports?
a) United States
b) China
c) European Union
d) United Arab Emirates
Show Answer
Correct Answer: b) China
Explanation: China is a major source of India’s imports, with a significant share of the country’s total imports originating from China. Key import items from China include electronic goods, machinery, chemicals, and consumer goods.
Q15. Which of the following is a major government initiative aimed at promoting exports from India?
a) Export Promotion Councils (EPCs)
b) Special Economic Zones (SEZs)
c) Export-Import Bank of India (EXIM Bank)
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: Export Promotion Councils (EPCs), Special Economic Zones (SEZs), and the Export-Import Bank of India (EXIM Bank) are all major government initiatives aimed at promoting exports from India. EPCs facilitate export promotion activities, SEZs provide a conducive environment for export-oriented industries, and the EXIM Bank provides financial assistance to exporters.
Q16. Which of the following is a major government initiative aimed at promoting import substitution in India?
a) Make in India
b) Startup India
c) Skill India
d) Digital India
Show Answer
Correct Answer: a) Make in India
Explanation: The Make in India initiative is a major government initiative aimed at promoting import substitution in India. The program seeks to transform India into a global manufacturing hub, attract foreign direct investment, and reduce the country’s dependence on imports by promoting domestic production.
Q17. Which of the following is a major challenge faced by the Indian economy in terms of export competitiveness?
a) High export growth
b) Low export growth
c) High import growth
d) Low import growth
Show Answer
Correct Answer: b) Low export growth
Explanation: A major challenge faced by the Indian economy in terms of export competitiveness is low export growth. Factors such as infrastructural bottlenecks, high transaction costs, and an unfavourable exchange rate can hamper the growth of exports and affect the country’s overall trade balance.
Q18. Which of the following is a major challenge faced by the Indian economy in terms of import dependence?
a) High import dependence
b) Low import dependence
c) High export dependence
d) Low export dependence
Show Answer
Correct Answer: a) High import dependence
Explanation: A major challenge faced by the Indian economy in terms of import dependence is high import dependence. The country relies heavily on imports of essential items such as crude oil, electronic goods, and machinery, which can expose the economy to external shocks and affect its macroeconomic stability.
Q19. Which of the following is a major government initiative aimed at promoting trade facilitation in India?
a) Electronic National Agriculture Market (e-NAM)
b) Integrated Goods and Services Tax (IGST)
c) Single Window Interface for Facilitating Trade (SWIFT)
d) National Skill Development Mission (NSDM)
Show Answer
Correct Answer: c) Single Window Interface for Facilitating Trade (SWIFT)
Explanation: The Single Window Interface for Facilitating Trade (SWIFT) is a major government initiative aimed at promoting trade facilitation in India. The platform aims to simplify and streamline the customs clearance process by providing a single interface for the submission of documents and obtaining necessary approvals from various government agencies.
Q20. Which of the following is a major challenge faced by the Indian economy in terms of trade diversification?
a) High trade diversification
b) Low trade diversification
c) High trade concentration
d) Low trade concentration
Show Answer
Correct Answer: b) Low trade diversification
Explanation: A major challenge faced by the Indian economy in terms of trade diversification is low trade diversification. The country’s exports and imports are concentrated in a few products and markets, which can expose the economy to external shocks and limit its ability to benefit from global trade opportunities.