1. Consider the following statements: Foreign indirect investment includes
1. Global Depository Receipts and Foreign Currency Convertible Bonds.
2. Foreign Institutional Investment.
3. Non-resident External Deposits.
4. Investment of a Multinational company in a domestic power project. Of these statements:

2. Assertion (A) : Free international trade necessarily lowers the real wage of the scarce factor of production in terms of any good.
Reason (R) : If the real wage declines in terms of every good, real income must suffer regardless of the tastes and expenditure patterns of the labourers as consumers.

3. Assertion (A): Devaluation changes ipso facto exchange rates.
Reason (R): Revaluation is the op posite of devaluation.

4. Customs union always leads to

5. Consider the following statements: Under free trade
1. Prices of fertilizers will be lowered compared to world prices.
2. Consumption of fertilizers will increase.
3. Imports of fertilizers will be zero. Which of these statements are correct?"

6. Which of the following items were responsible for most of the increase in international liquidity since World War-II?

1. Gold
2. Dollars
3. Other Convertible Currencies
4. SDRs
Select the correct answer using the codes given below:

7. Assertion (A) : Customs duties primarily influence commodity prices.
Reason (R) : Quantitative restrictions are designed to determine the amount of goods imported or exported.

8. The country is likely to be better off after export-ledgrowth provided that

9. The automatic borrowing rights of a member of IMF are determined by

10. In respect of the production possibility curve under increasing opportunity costs given above, consider the following statements:
1. The production possibility curve is not indentical with price curve as in the case of constant costs.
2. There would be complete specialisation of a co untry in a single com m o dity in a tw ocommodities and two countries model. Which of the statements is/are correct?

11. For the Heckscher-Ohlin theory of trade to be valid, the relative factor endowments of two countries should be

12. Assertion (A) : Marshall–Lerner condition should be fulfilled if devaluation is to be sucessful.
Reason (R) : Devaluation makes exports costly and imports cheaper.

13. Assume that the nominal rate of tariff on imports of final commodity is 30%. The nominal rate of traiff on the imported inputs is 10% and the ratio of imported inputs to the value of the final commodity is 50%. Then the effective rate of tariff will be

14. The rate of exchange at equilibrium is one that maintains

15. The tariff which maximises a country's economic welfare is called

16. Which one of the following pairs is not correctly matched.

17. Assertion (A): Devaluation can correct the imbalance in the balance of payment.
Reason (R): Devaluation raises the price of imported goods and reduces the foreign price of exports of the devaluing country.

18. Assertion (A): The gains from trade are determined by the terms of trade.
Reason (R): The gains from trade depend on the differences in comparative cost ratios.

19. A tariff will not have any effect on revenue if the duty imposed is

20. Where the foreign offer curves has an elasticity of one, the optimum tariff will be

21. Consider the following statements:
I. the offer-curve is a straight line.
1. high tariff rates can improve terms of trade.
2. low tariff rates can improve terms of trade.
3. absence of tariff can improve terms of trade. Of these statements:

22. One of the advantages of free trade is improvement in the distribution of income. Free trade thus results in some income redistribution by

23. Match List-I with List-II and select the correct answer using the codes given below the lists
List-I List-II (a) Hamilton-List 1. Trade creation and Trade diversion effects (b) Marshall-Lerner 2. Infant-Industry argument (c) F.Y. Edgeworth 3. Elasticity approach (d) Jacob Viner 4. Impoverishing growth Codes: (a) (b) (c) (d)

24. Consider the following statements: Devaluation results in a
1. rise in the domestic price of imports
2. rise in the domestic price of exports
3. rise in the domestic price of exports and imports
4. fall in the foreign price of exports Which of the above statements are correct?

25. The above graph shows different effects of tariffs in partial equilibrium. Which one of the following indicates the revenue effect of a tariff equal to PP1 per unit?