Textbook Exercise Questions and Answers
I. Choose the Correct Answer
Question 1.
General Agreement on Tariff and Trade was signed on ………………
(a) 30 – October – 1947
(b) 29 – October – 1947
(c) 28 – October – 1947
(d) 26 – October – 1947
Answer:
(a) 30 – October – 1947
Question 2.
WTO was established on ………………
(a) 1 – 1 – 1996
(b) 1 – 1 – 1997
(c) 1 – 1 – 1995
(d) 1 – 1 – 1994
Answer:
(c) 1 – 1 – 1995
Question 3.
The headquarter of WTO is located at ………………
(a) New York
(b) London
(c) Geneva
(d) Brazil
Answer:
(c) Geneva
Question 4.
The day to day administration of WTO is entrusted with ………………
(a) Executive Council
(b) General Council
(c) Administrative Council
(d) General Body
Answer:
(b) General Council
Question 5.
World bank is located at ………………
(a) Washington DC
(b) New York
(c) Tokyo
(d) Hongkong
Answer:
(a) Washington DC
II. Very Short Answer Questions
Question 1.
What is WTO?
Answer:
The World Trade Organisation (WTO) was established on 1st January 1995. The GATT was renamed as WTO with some changes.
Question 2.
What do you mean by World Bank?
Answer:
International Bank for Reconstruction and Development (IBRD) International Bank for Reconstruction and Development is commonly known as World Bank.
Question 3.
What is Special Drawing Rights?
Answer:
Special Drawing Rights (SDR) was created by the IMF in the year 1969 as a supplementary international reserve asset. It is described as paper gold.
Question 4.
What is SAARC?
Answer:
South Asian Association for Regional Cooperation is the regional intergovernmental organization and geopolitical union of nations in South Asia.
Question 5.
What is GATT?
Answer:
The General Agreement on Tariffs and Trade. (GATT) was signed at Geneva on 30th October 1947 by 23 countries. It came into effect on 1st January 1948.
III. Short Answer Questions
Question 1.
What is the primary motive for the establishment of WTO?
Answer:
GATT achieved much success but various countries felt the need to create a new international body to replace the GATT. The GATT which remained in force from 1948 to 1994 thus came to an end with the establishment of the World Trade Organisation (WTO) on 1st January 1995.
Question 2.
Name the affiliate of World Bank.
Answer:
Question 3.
What are the criticisms of the World Bank?
Answer:
Question 4.
How is the value of SDR determined currently?
Answer:
From 1st October 2016 SDR basket consists of the US dollar, Euro, the Chinese Renminbi, Japanese Yen, and British Pound sterling. The value of SDR is regularly posted daily on the IMF website. IMF members can exchange SDR for freely usable currencies by voluntary exchange or as per IMF instructions. Besides members can borrow from IMF at a favorable rate of interest to correct the imbalance in the balance of payments.
Question 5.
Mention the functions of SAARC.
Answer:
IV. Long Answer Questions
Question 1.
Point out the objectives of WTO.
Answer:
Question 2.
Write down the functions of WTO.
Answer:
Question 3.
Describe the benefits of WTO.
Answer:
1. WTO is promoting international peace and creating a conducive environment for conducting international trade.
2. It settles the trade disputes amicably among the member countries.
3. It promotes the standard of living of people by increasing their income level from free trades.
4. WTO has removed quantitative restrictions and non – tariff barriers. It has facilitated free flow of foreign trade among the member countries. The countries can impose import restrictions only to correct balance of payments difficulties and not otherwise.
5. It stimulates the economic growth of developing countries by providing them with much-needed capital and giving them preferential treatment in trade-related matters.
6. WTO organizes the periodical regional and international conferences. Thus developing countries get the opportunity to learn the technicalities, rules and regulations governing the world, trade, technical assistance available globally, trade potentials in member countries and so on.
7. WTO gives people across the world a wider choice of goods and a broader range of qualities of goods to choose from by promoting free trade among the member countries.
8. WTO has lowered trade barriers and thereby allowed trade to flourish across the world. The increase in trade contributes to increase in national income and personal income of people
9. WTO provides a platform for member countries to establish trade links with one another. In the absence of WTO member countries may have to enter many multilateral agreement with so many countries across the world. It provides a greater access to all nations under one roof.
10. WTO is committed to protecting free trade. It has framed rules on subsidies and dumping.
Question 4.
Highlights the functions of IBRD.
Answer:
Question 5.
Write down the functions of IMF.
Answer:
Question 6.
Explain how far India has benefited from IMF.
Answer:
Free Convertibility of Indian Rupee:
Indian rupee has become independent after the establishment of IMF. Earlier it was linked with the pound sterling. Its value is now determined in terms of Gold. Hence it is freely convertible.
1. Loan For Development Activities: India got several loan facilities from IMF for its several development projects.
2. Ability To Purchase Foreign Currency: The government of India is able to purchase foreign currencies from time to time to meet the ever-growing requirement of development activities.
3. Expert Advice: India used to get expert advice from IMF for solving the economic problems. It has given valuable advice to India with regard to financing its 5-year plan.
4. Timely Help: India has received timely help from IMF many a time to eliminate the deficit in its balance of payments. India got help from IMF during 1966 in the aftermath of the war with Pakistan. It received assistance from IMF for combating oil shock. Between 1980 and 1983 India got assistance from IMF to manage global economic recession.
5. Financial Assistance during Natural Calamity: India has got a lot of financial assistance from IMF to solve the economic crises arising from natural calamities like floods, famine, earthquake, aggressions of Chinese and Pakistan etc. It gets technical assistance from IMF.
6. Membership in World Bank: By virtue of its membership in IMF India could become a member in the World Bank.
7. Help During 1991 Economic Crisis: During 1990, India faced a serious economic crisis. Indian Government was almost nearing bankruptcy. It got assistance from IMF by pledging ‘ its gold reserve with it to solve its balance of payments crisis.
For Own Thinking
Question a.
A vital role played in international business by WTO?
Answer:
The main goal of WTO is to help the trading industry to become smooth, fair, free and predictable.
Question b.
Necessity for world as a global village through IMF, IBRD, and SAARC?
Answer:
For Future Learning
Question a.
WTO – new agreements?
Answer:
TFA entered into force on 22 February 2017 following its ratification by two-thirds of the WTO membership.
Question b.
IMF World Bank and SAARC major role in international business?
Answer: