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Consider the following statements.
- A barrier to trade is a government-imposed restraint on the flow of international goods or services.
- Capping foreign direct investment in sensitive sectors is a major example of trade barrier.
- Unreasonable tax on imports is a trade barrier.
Which of the above statements is/are correct?
- a)1, 2
- b)1 only
- c)1, 3
- d)1, 2, 3
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements. A barrier to trade is a government-...
Statement 1: A barrier to trade is a government-imposed restraint on the flow of international goods or services.
This statement is correct. A barrier to trade refers to any government policy or regulation that restricts the flow of goods or services across international borders. These barriers can take various forms, such as tariffs, quotas, subsidies, embargoes, or regulations. The purpose of implementing trade barriers is to protect domestic industries, regulate imports and exports, address national security concerns, or correct trade imbalances.
Statement 2: Capping foreign direct investment in sensitive sectors is a major example of a trade barrier.
This statement is incorrect. Capping foreign direct investment (FDI) in sensitive sectors is not considered a trade barrier. FDI refers to the investment made by a company or individual from one country into another country. While restrictions on FDI can exist for national security or strategic reasons, they are not typically classified as trade barriers. Trade barriers primarily involve restrictions on the flow of goods and services, not capital investment.
Statement 3: Unreasonable tax on imports is a trade barrier.
This statement is correct. An unreasonable tax on imports, also known as a tariff, is a trade barrier. Tariffs are taxes imposed by governments on imported goods, making them more expensive and less competitive compared to domestically produced goods. The purpose of tariffs is to protect domestic industries by making imported goods more expensive and encouraging consumers to buy locally produced goods. Tariffs are a commonly used trade barrier to restrict imports and promote domestic industries.
Conclusion: Based on the above analysis, statement 1 and statement 3 are correct. Therefore, the correct answer is option 'C' - 1 and 3.
This statement is correct. A barrier to trade refers to any government policy or regulation that restricts the flow of goods or services across international borders. These barriers can take various forms, such as tariffs, quotas, subsidies, embargoes, or regulations. The purpose of implementing trade barriers is to protect domestic industries, regulate imports and exports, address national security concerns, or correct trade imbalances.
Statement 2: Capping foreign direct investment in sensitive sectors is a major example of a trade barrier.
This statement is incorrect. Capping foreign direct investment (FDI) in sensitive sectors is not considered a trade barrier. FDI refers to the investment made by a company or individual from one country into another country. While restrictions on FDI can exist for national security or strategic reasons, they are not typically classified as trade barriers. Trade barriers primarily involve restrictions on the flow of goods and services, not capital investment.
Statement 3: Unreasonable tax on imports is a trade barrier.
This statement is correct. An unreasonable tax on imports, also known as a tariff, is a trade barrier. Tariffs are taxes imposed by governments on imported goods, making them more expensive and less competitive compared to domestically produced goods. The purpose of tariffs is to protect domestic industries by making imported goods more expensive and encouraging consumers to buy locally produced goods. Tariffs are a commonly used trade barrier to restrict imports and promote domestic industries.
Conclusion: Based on the above analysis, statement 1 and statement 3 are correct. Therefore, the correct answer is option 'C' - 1 and 3.
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Consider the following statements. A barrier to trade is a government-...
- A barrier to trade is a government-imposed restraint on the flow of international goods or services. The most common barrier to trade is a tariff—a tax on imports. Tariffs raise the price of imported goods relative to domestic goods (goods produced at home).
- An import quota is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time.
- FDI is related to the capital sector and overall investment policy of the nation. FDI is not considered a trade component.
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Consider the following statements. A barrier to trade is a government-imposed restraint on the flow of international goods or services. Capping foreign direct investment in sensitive sectors is a major example of trade barrier. Unreasonable tax on imports is a trade barrier.Which of the above statements is/are correct?a)1, 2b)1 onlyc)1, 3d)1, 2, 3Correct answer is option 'C'. Can you explain this answer?
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