Test: International Economic Institutions - UGC NET MCQ

• The Assertion statement is accurate. The Trade Facilitation Agreement (TFA) does indeed aim to simplify international trade by reducing bureaucratic barriers and streamlining customs regulations.
• The Reason statement is also correct. The TFA was indeed adopted at the WTO's Bali Ministerial Conference in December 2013.
• However, the Reason statement does not provide a direct explanation of the Assertion. While both statements are true individually, the Reason statement does not directly explain why the TFA aims to make international trade more efficient.
• Therefore, Option C is the correct answer: If Assertion is true but Reason is false.

The Bretton Woods Conference, which took place in 1944, resulted in the establishment of the International Monetary Fund (IMF) and the creation of the International Bank for Reconstruction and Development (IBRD), also known as the World Bank. These institutions were designed to stabilize the international monetary system and facilitate post-World War II reconstruction and development efforts worldwide. The IMF was tasked with promoting global monetary cooperation, exchange rate stability, and providing temporary financial assistance to countries facing balance of payments problems. The World Bank, on the other hand, aimed to provide financial and technical assistance for long-term development projects to promote economic growth and reduce poverty in member countries.

IMF lending primarily aims to help member countries address balance of payments issues, stabilize their economies, and restore sustainable economic growth. This assistance is crucial in facilitating smooth adjustments to economic shocks, helping countries avoid disruptive adjustments or sovereign defaults, which can have significant costs for both the country and others through economic and financial contagion. IMF lending also serves as a catalyst for other lenders, unlocking additional financing opportunities, and aids in crisis prevention, as capital account crises can impose substantial costs on countries and potentially spread contagion to others.

A defining characteristic of international organizations is the involvement of a relatively stable group of member states working together towards common objectives. These organizations are established based on multilateral international agreements and typically have permanent bodies with specific competencies and powers. They play crucial roles in safeguarding the sovereignty of states while promoting peaceful cooperation among them, irrespective of their diverse social systems. This stability and cooperative nature are essential for fulfilling the functions and objectives of international organizations effectively.

Assertion Correctness: The assertion is correct as SAFTA indeed aims to eliminate import taxes and duties by a specific target year.

Reason Correctness: The reason is also correct as SAPTA was indeed initiated before SAFTA to foster mutual trade among SAARC nations.

Explanation: While both statements are individually true, the reason does not directly explain the assertion. SAFTA's aim to eliminate import taxes and duties is a specific goal of the agreement, while SAPTA's initiation is related to promoting trade cooperation. Thus, although both statements are correct, the reason does not provide a direct explanation for the assertion, making Option B the correct answer.

Key Points

• India has been ranked at the 116th  position in the latest edition of the World Banks annual Human Capital Index.
• The 2020 Human Capital Index update includes health and education data for 174 countries covering 98 per cent of the world's population up to March 2020.
• India’s score increased to 0.49 from 0.44 in 2018.

Important Points

• Human Capital Index(HCI) claims to seek to measure the amount of human capital that a child born today can expect to attain by age 18.
• The HCI has three components
• Survival: As measured by under-5 mortality rates.
• Expected years of Quality-Adjusted School: which combines information on the quantity and quality of education.
• Health environment: Using two proxies of
  • adult survival rates
  • the rate of stunting for children under age 5.

• The Assertion is true. The WTO's Trade Facilitation Agreement does aim to streamline global trade by reducing barriers and enhancing customs cooperation.
• The Reason is also true. The Trade Facilitation Agreement primarily focuses on simplifying, harmonizing, and standardizing customs procedures.
• However, the Reason is not the correct explanation of the Assertion. While the Reason provides additional context about the Trade Facilitation Agreement, it does not directly explain why the Agreement aims to streamline global trade.

• Assertion is partially correct. The OECD does aim to promote economic progress, but it primarily focuses on developed countries rather than developing nations.
• The Reason is incorrect. The collaboration with the FATF is more centered on combating terrorist financing and money laundering rather than addressing economic disparities within member countries.

• Statement 1: BRICS indeed stands for Brazil-Russia-India-China-South Africa, as these are the member countries of the coalition. This statement is correct.
• Statement 2: The G-77 was indeed established on June 15, 1964, by 77 non-aligned nations. This statement is also correct.
• Therefore, both statements are accurate, making option C, "Both 1 and 2," the correct answer.

Special Drawing Rights (SDRs) were created by the IMF as an international reserve asset to supplement member countries' official reserves. One of the primary purposes of SDRs is to serve as the IMF's accounting unit, providing a stable asset in a country's international reserves. This helps in diversifying and strengthening the global financial system by offering a supplementary reserve asset that is based on a basket of major currencies, including the US dollar, Japanese yen, British pound, euro, and Chinese renminbi.