QUIZ – 2020: INSIGHTS STATIC , 26 November 2020 – Economy

Solution: b)

The Agreement on Trade-Related Investment Measures (TRIMs) are rules that are applicable to the domestic regulations a country applies to foreign investors, often as part of an industrial policy. The agreement, concluded in 1994, was negotiated under the WTO’s predecessor, the General Agreement on Tariffs and Trade (GATT), and came into force in 1995. The agreement was agreed upon by all members of the World Trade Organization. Trade-Related Investment Measures is one of the four principal legal agreements of the WTO trade treaty.

TRIMs are rules that restrict preference of domestic firms and thereby enable international firms to operate more easily within foreign markets. Policies such as local content requirements and trade balancing rules that have traditionally been used to both promote the interests of domestic industries and combat restrictive business practices are now banned.

Solution: a)

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. The value of the SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

Solution: a)

Inflation is basically too much money chasing too few goods, or excess demand chasing limited supply. If income rises faster, demand for goods and services will also rise. On the other hand, if the economy is unable to satisfy the increased demand, for e.g. due to poor infrastructure, lack of production etc, the higher income will spiral the prices upwards and lead to high inflation.

Excess supply is likely to bring prices down.

Solution: c)

A receipt is a capital receipt if it satisfies any one of the two conditions:

(i) The receipts must create a liability for the government. For example, Borrowings are capital receipts as they lead to an increase in the liability of the government. However, tax received is not a capital receipt as it does not result in creation of any liability.

(ii) The receipts must cause a decrease in the assets. For example, receipts from sale of shares of public enterprise is a capital receipt as it leads to reduction in assets of the government.

Solution: d)

It is a tool that will allow developing countries to raise tariffs temporarily to deal with import surges or price falls.