Ramesh Singh Test : International Economic Organisations And India


10 Questions MCQ Test Economy Traditional for UPSC (Civil Services) Prelims | Ramesh Singh Test : International Economic Organisations And India


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QUESTION: 1

An IMS (International monetary system) is considered good if it fulfils the objectives of:

1. Maximises the flow of foreign trade and foreign investments

2. Leads to an equitable distribution of the gains from trade among the nations of the World

Which of these statements is/are correct?

Solution: An IMS is considered acceptable if it impartially fulfils the following two objectives

(i) maximises the flow of foreign trade and foreign investments, and

(ii) leads to an equitable distribution of the gains from trade among the nations of the World. The evaluation of an IMS is done in terms of adjustment, liquidity and confidence which it manages to wield.

QUESTION: 2

Which of the following are the main functions of the International Monetary Fund?

1. Purchasing short term foreign currency liabilities of the member Nations

2. Exchange rate regulation

3. Deciding the fiscal policy of a country

Which of these statements is/are correct?

Solution:
  • The International Monetary Fund (IMF) came up in 1944,

  • The main functions of the IMF are as given below:

  • (i) to facilitate international monetary cooperation;

  • (ii) to promote exchange rate stability and orderly exchange arrangements;

  • (iii) to assist in the establishment of a multilateral system of payments and the elimination of foreign exchange restrictions, and to assist member countries by temporarily providing financial resources

QUESTION: 3

IMF reviews members' quotas once in every:

Solution:
  • IMF reviews members' quotas once in every five years-last done in December 2010—here, India consented for its quota increase.

QUESTION: 4

Consider the following statements.

1. India has been borrowing from the IMF through the financial transaction plan due to the critical balance of payment situation

2. India also contributes to the IMF through the extended fund facility.

Which of these statements is/are correct?

Solution:
  • Once a member nation has signed the extended fund facility agreement with the IMF, borrowing is made by the member nation- India signed this agreement in fiscal 1981-82.

  • India has been borrowing from the IMF due to critical balance of payment (BOP) situations once between 1981–84 (SDR 3.9 billion) and next during 1991 (SDR 3.56 billion).

  • All the loans taken from the IMF have been repaid. India is now a contributor to the IMF as it participates in the Financial Transactions Plan (FTP) of the IMF since September 2002—at this time India was in a strong balance of payment situation and a comfortable forex reserves position.

QUESTION: 5

World Bank consists of:

1. International Finance Corporation

2. International Development Agency

3. International Monetary Fund

Choose from the following options.

Solution: World Bank consists of
  • International Bank for reconstruction and development

  • International Development Agency

  • International Finance Corporation

  • The multilateral investment guarantee agency

  • International Centre for settlement of investment disputes

QUESTION: 6

India is not a member of:

Solution: It is believed that being a signatory to it encourages the foreign investment flows into an economy, but risks independent sovereign decisions too.

QUESTION: 7

Consider the following statements about the Bilateral Investment Promotion and Protection Agreement.

1. The objective is to promote and protect the interest of investors of either country in the territory of another country.

2. It serves the same purpose as the international centre for settlement of investment disputes.

Which of these statements is/are incorrect?

Solution:
  • As part of the Economic Reforms Programme initiated in 1991, the foreign investment policy of the Government of India liberalised and negotiations were undertaken with a number of countries to enter into Bilateral Investment Promotion & Protection Agreement (BIPA) to promote and protect on reciprocal basis investment of the investors.

  • The Government of India has, so far, (as by July 2012) signed BIPAs with 82 countries out of which 72 BIPAs have already come into force and the remaining agreements are in the process of being enforced."

  • The objective of the BIPA is to promote and protect the interests of investors of either country in the territory of another country.

QUESTION: 8

Consider the following statements.

1. India is one of the founding members of the Asian Development Bank.

2. Its headquarters are in Beijing, China.

Which of these statements is/are correct?t?

Solution: Its headquarters are situated in Manila, Philippines. It was set up in 1966 with 31 founding members including India.

QUESTION: 9

Uruguay Rounds are related with:

Solution: The World Trade Organization (WTO) came into being as a result of the evolution of the multilateral trading system starting with the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947. The protracted Uruguay Round negotiations are spanning the period 1986–1994.

QUESTION: 10

Fortaleza Declaration is related to:

Solution: Together with the process of globalisation world regional forces have also been asserting their power through different short of alignments, the Fortaleza Declaration of heads of state (late July 2014) from Brazil, Russia, India, China, and South Africa (the BRICS countries) is another such attempt-creation of a BRICS Bank, i.e., New Development Bank (NDB).