B.Com Ist Year International Monetary Fund Short Question Answer Notes
Q.119. What is meant by Foreign Investment?
Ans. Foreign Investment refers to investment by foreign investors in shares, debentures, bonds of Indian companies. Now our government has started encouraging the entry of foreign capital from foreign private sector. Foreign private sector investment is made by individuals or companies of foreign country in the private or public sector of India. This type of investment is mainly in the form of equity capital, which has no fixed interest burden. It can be made either in the form of Foreign Direct Investment (FDI) or Portfolio Investment.
Q.120. What do you understand by Foreign Direct Investment (FDI)?
Ans. See Page No. 133.
Q.121. What do you understand by Portfolio Investment ?
Ans. See Page No. 133 and 134.
Q.122. Distinguish between Foreign Direct Investment and Portfolio Investment.
Ans. Main difference between foreign direct investment and portfolio investment is that in case of FDI, foreign investor also manages the enterprise, in which it makes investment. While in case of portfolio investment it simply makes investment but does not manage the enterprise. Moreover, FDIs are governed by long term considerations because these investments cannot be easily liquidated. Hence, factors like long term political stability, government policy, industrial and economic prospects etc. influence the FDI decision. However, portfolio investments are governed by short term considerations and can be easily liquidated in the stock markets.
Q.123. Write need/objectives of Foreign investment in India.
Ans. Foreign investment is needed due to following reasons:
1. To increase level of investment by supplementing the domesticinvestment.
2. To develop basic industries in India.
3. To develop infrastructure.
4. To remove the shortage of foreign exchange, because of deficit balance of payments.
5. To improve managerial and entrepreneurial ability.
6. To set-up risky and capital intensive projects.
7. To improve technology.
8. To increase employment opportunities.
Q.124. What is the main sources of foreign capital?
Ans. (1) Direct foreign investment, (2) Portfolio investment,(3). Loan from International Institutions, (4) External commercial borrowing.
Q.125. What is meant by Tied Foreign Assistance ?
Ans. Tied Foreign Assistance refers to that assistance which is provided only for specific purpose. This amount can be used only in those projects for which it is sanctioned.
Q.126.Write the main objectives of FEMA.
Ans. See Page No. 139 and 140.
Q.27. Is Foreign trade an engine of developme Q.1- Elucidate. (Meerut, 2014)
Ans. Foreign trade plays a vital role in in the economic lopment of a country. If an under-developed country wishes to k the vicious circle of poverty, attain self-sustained grow sform itself from an agrarian economy to an industrialised one, it will have to import the various requistes of development. therefore Robertson calls foreign trade an engine of growth.
Q.128. Describe the advantages/importance of Foreign Trade.
Ans. See Page No.142 and 143.
Q.129. What are the disadvantages of Foreign Trade
Ans. See Page No.143 and 144.
Q.129A.Write short note on trends in world trade. (Meerut, 2013)
Ans. Trends in worla trade can be analysed in the following manner:
(1) Increase in World’s Export: There is increasing trend in world’s export. The main reason of increase in world’s exports is reduction in tariff and non-tarrif barriers, multilateral trade, increase in means of communication, hike in oil prices etc.
(ii) Increase in World Trade in Services : Services like travel, tourism, banking, software, advertising etc. is another area in which world trade is expanding very fast.
(iii) Growth of Regional Blocks in World Trade : Some of the leading trade blocks have improved their share in world trade. EC, NAFTA, ASEAN, SAARC etc. increased their share considerably.
(iv) Increase in the Share of Developing Countries in World’s Export : Trade growth rate in developing countries has increased faster than the trade growth rate of industrially advanced countries.
Q.129.B.Write a short note on problems of developing countries regarding world trade. (Meerut, 2013 Back)
Ans. (i) Low Quality : Goods exported from developing countries are of low quality as compared to goods of developed countries.
(ii ) Limited Market : Goods of developing countries haye limited market for their exports.
- Dumping: Developed countries sold goods at a very low prices in the markets of developing countries which create problems for their survival.
- Terms of Trade : Terms of trade in world trade are generally less favourable for developing countries.
Q.130. What are the targets of eleventh plan regarding in-come and poverty ?
Ans. The targets of eleventh plan regarding income and poverty are as follows:
- To achieve 8% average annualin total GDP.
- To achieve 4% annual growth in agricultural GDP. TA
(iii) To generate 50 million new employment opportunities, during plan period.
(iv) To reduce unemployment among educated section and to bring it down, below 5%.
- To increase real wages of unskilled workers by 20%. *
- (vi) To bring down consumption poverty, to 10% point.
Q.131. What are the main objectives of WTO? 18
Ans. See Page No. 150 and 151.102.691 is Throaza abitow
Q.132. Write a short note on TRIPs.6-on basin at totoober
Ans. The Agreement on Trade Related Intellectual Property Rights (TRIPS) lays down norms and standards for safeguarding seven types of intellectual property, viz., copyright, geographical indications, trademarks, industrial design, patents, undisclosed information and layout designs of integrated circuits. The member countries may have to change their patent and copyright acts accordingly. A transition period of five years is available to all developing countries to give effect to the provisions of the TRIPS 00 Agreement Countries which do not provide product patent in certain areas can delay the provisions of product patents for another five years.
B.Com Ist Year International Monetary Fund Short Question Answer Notes
Q.133. Write a short note on TRIMs.
Ans. The agreement on Trade Relate Investment Measures calls for introducing national treatment of foreign investments and removal of quantitative restrictions on imports and exports. However, exceptions are allowed if a country is suffering from balance of payments problems. Under TRIMS agreement, investment regulations have to accord same treatment to domestic products and imports.
Q.134. Write a short note on GATS.
Ans. The GATS provides am principles and services which should govern trade in services under conditions of transparency and progressive liberalisation. The GATS requires that the countries would provide market access to foreign service suppliers. It allows countries to apply immigra laws to regulate the entry of persons into their territories
Q.135. Write a short note on objectives of World Bank. (Meerut, 2013)
Ans. See Page No. 155 and 156.
Q.136. Write a short note on objectives of IMF.
Ans. See Page No.161.
Q.137. Discuss briefly the working of IMF. (Meerut, 2013)
Ans. The establishment of an International Monetary Fund was the outcome of a conference held at Bretton Woods, New Hampshire, in 1944. The main aim for which the I.M.F. was set up were to provide exchange stability, temporary assistance to countries falling short of foreign exchange and international sponsoring of measures for curing fundamental causes of disequilibrium in balance of payments. The I.M.F. is a pool of central bank reserves and national currencies which are available to its members under certain conditions.
The capital resources of the fund are subscribed by the various member countries by way of their respective quotas. For increasing international liquidity IMF created a scheme called Special Drawing Rights (SDRs). It is also known as paper gold. The IMF lends to member countries to correct their temporary deficit in the balance of payment. It promotes orderly adjustment of exchange rates to promote exchange stability.
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