Wisdom College of Commerce and Management

1. What is meant by international trade?

International trade is the exchange of goods and services between countries. Trading
globally gives consumers and countries the opportunity to be exposed to goods and
services not available in their own countries, or more expensive domestically.
2. What is domestic trade?
Domestic trade, different from international trade, is the exchange of domestic goods
within the boundaries of a country
3. what is theory of absolute cost advantage? Or adam smit theory
Absolute advantage is when a producer can produce a good or service in greater
quantity for the same cost, or the same quantity at a lower cost, than other producers.
Absolute advantage can be the basis for large gains from trade between producers of
different goods with different absolute advantages.
4. Write any two assumptions of the absolute cost advantage theory?
• Trade is between two countries
• Only two commodities are traded
• Free trade exists between the countries
5. what is theory of comparative cost advantage? Or David Recardo theory
The theory of comparative advantage introduces opportunity cost as a factor for
analysis in choosing between different options for production. Comparative advantage
suggests that countries will engage in trade with one another, exporting the goods that
they have a relative advantage in.
6. Write any two assumptions of the comparative cost advantage theory?
• There exists full employment
• The only element of cost of production is labour
• There are no trade barriers
7. what is relative factor endowment theory? Or heckscher-ohlin (H-O) theory? Or modern
theory?
The factor endowment theory holds that countries are likely to be abundant in
different types of resources. ... The Hechsher-Olin Theory holds that a country will
have a comparative advantage in the good that uses the factor with which it is heavily
endowed
8. Define balance of payment?
Prof. Benham “The balance of payments (BOP) is an accounting of a country's
international transactions for a particular time period. Any transaction that causes
money to flow into a country is a credit to its BOP account, and any transaction that
causes money to flow out is a debit.”
9. what is current account in balance of payment
The current account of the balance of payments includes a country's key activity, such
as capital markets and services. ... The four major components of a current account
are goods, services, income, and current transfers.
10. what is capital account in balance of payment
The capital account is part of a country's balance of payments. It measures financial
transactions that affect a country's future income, production, or savings
11. What is disequilibrium?
Though the credit and debit are written balanced in the balance of payment account, it
may not remain balanced always. Very often, debit exceeds credit or the credit
exceeds debit causing an imbalance in the balance of payment account. Such an
imbalance is called the disequilibrium.

Prepared by: Sangamesh uppar

Lecturer in commerce
 Wisdom College of Commerce and Management
12. Write any two types of disequilibrium
• Cyclical disequilibrium
• Secular disequilibrium
• Structural disequilibrium
13. what is cyclical disequilibrium
Cyclical Disequilibrium: It occurs on account of trade cycles. Depending upon the
different phases of trade cycles like prosperity and depression, demand and other
forces vary, causing changes in the terms of trade as well as growth of trade and
accordingly a surplus or deficit will result in the balance of payments.
14. what is secular disequilibrium in balance of payment
Secular disequilibrium in the balance of payments is a long-term, phenomenon,
caused by persistent, deep-rooted dynamic changes that slowly take place in the
economy over a long period of time.
15. what is structural disequilibrium in balance of payment?
Structural Disequilibrium: It emerges on account of structural changes occurring in
some sectors of the economy at home or abroad which may alter the demand or
supply relations of exports or imports or both. ... Moreover, a shift in demand occurs
with the changes in tastes, fashions, habits, income, economic progress, etc.
16. What is fundamental disequilibrium?
A “fundamental disequilibrium” exists when outward payments have a continuing
tendency not to balance inward payments. A disequilibrium may occur for various
reasons. Some may be grouped under the head of structural change (resulting from
changes in tastes, habits, institutions, technology, etc.).

17. What is tariffs?

18. A tariff is a duty or tax imposed by the government of a country upon the traded
commodity as it crosses the national boundaries. Tariff can be levied both upon exports
and imports. ... The import duties or import tariffs are levied upon the goods originating
from abroad and scheduled for the home country.
19. What is quotas?
20. A quota is a government-imposed trade restriction that limits the number or monetary
value of goods that a country can import or export during a particular period. Countries
use quotas in international trade to help regulate the volume of trade between them and
other countries.
21. What is the Fixed Exchange Rate?
A fixed exchange rate is a regime imposed by a government or central bank which ties the
official exchange rate of the country's currency with the currency of another country or
the gold price. A fixed exchange rate system has the aim of keeping the value of a
currency within a narrow band.
22. What is meant by floating exchange rate?
A floating exchange rate is a regime where the currency price of a nation is set by the
forex market based on supply and demand relative to other currencies. This is in contrast
to a fixed exchange rate, in which the government entirely or predominantly determines
the rate.
23. What is export management?
Export management is the use of managerial process to the serviceable area of exports. It
is basically associated with export activities and type of management that brings
harmonization and incorporation of an export business.

Prepared by: Sangamesh uppar

Lecturer in commerce
 Wisdom College of Commerce and Management
24. What is export finance?
Export financing is a cash flow solution for exporters. Export Finance facilitates the
commerce of goods internationally. The seller agrees on the payment terms of the cross
border buyer. Thus, there is a cash flow issue. The supplier ships the goods overseas
while the payment will be received at a later stage
25. Expand DGFT
Directorate General Foreign Trade
26. Expand ECGC
Export Credit and Guarantee Corporation
27. What is Mate’s recpit?
A Mate's Receipt is a temporary receipt issued and signed by the officer of a vessel, to
acknowledge the goods ready to be loaded on a ship. This acts as evidence that goods
were loaded in the vessel but it does not have the same validity as for instance, the bill of
lading.
28. What is bill of lading
A bill of lading (BL or BoL) is a legal document issued by a carrier to a shipper that
details the type, quantity, and destination of the goods being carried. A bill of lading also
serves as a shipment receipt when the carrier delivers the goods at a predetermined
destination.
29. What is letter of credit?
Export Letters of Credit are financial instruments issued by banks that represents the
commitment of the bank on behalf of an importer that guarantees payment will be made
to the beneficiary (exporter) provided the terms and conditions specified in the Letter of
Credit have been met
30. Expand IIFT?
Indian Institute of Foreign Trade
31. what you mean by export pricing?
Export pricing is a technique of fixing the prices of goods and services which are
intended to be exported and sold in the overseas markets.
32. GATT expand
The General Agreement on Tariffs and Trade
33. Write any two functions of WTO?
• To set and enforce rules for international trade,
• To provide a forum for negotiating and monitoring further trade liberalization,
• To resolve trade disputes
34. what is trade liberalization?
Trade liberalization is the removal of tariff and non-tariff barriers in trade, basically
international. This has significant macroeconomic and distributional effects. The
Heckscher-Ohlin Trade Theorem is the basic theoretical foundation of trade
liberalization.
35. What you mean by tTRIPs?
Trade-Related Aspects of Intellectual Property Rights
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an
international legal agreement between all the member nations of the World Trade
Organization (WTO). eg:- copy rights , patents etc

36. What is TRIMs?

The Agreement on Trade-Related Investment Measures are rules that are applicable to the
domestic regulations a country applies to foreign investors, often as part of an industrial
policy

Prepared by: Sangamesh uppar

Lecturer in commerce
 Wisdom College of Commerce and Management
37. What is copyright explain?
Copyright refers to the legal right of the owner of intellectual property. In simpler terms,
copyright is the right to copy. This means that the original creators of products and
anyone they give authorization to are the only ones with the exclusive right to reproduce
the work.
38. What you mean by patents?
A patent is an exclusive right granted for an invention. ... In other words, patent
protection means that the invention cannot be commercially made, used, distributed,
imported, or sold by others without the patent owner's consent.
39. Expand UNCTD
United Nations Conference on Trade and Development
40. Expand UNIDO
United Nations Industrial Development Organization (UNIDO)

Prepared by: Sangamesh uppar

Lecturer in commerce