GSEB Foreign Trade MCQ — Class 12

Domestic trade takes place within what?

Domestic trade is exchange within the same country.

Foreign trade involves exchange across what?

International trade links parties in different countries.

What is an export?

Exports supply goods or services to foreign buyers.

What is an import?

Imports bring foreign goods or services into the domestic economy.

What does the composition of foreign trade describe?

Composition identifies what is exported and imported.

What does the direction of foreign trade describe?

Direction describes trade partners or destinations and sources.

A merchandise trade balance compares what?

The merchandise trade balance is goods exports minus goods imports.

What is an exchange rate?

An exchange rate tells how much of one currency exchanges for another.

What does the balance of payments record broadly?

BOP records cross-border economic transactions over a period.

Why can countries benefit from trade?

Differences in production conditions create opportunities for exchange and specialisation.

1. A country sells cotton abroad and buys machinery from abroad. Which description is correct?

1. Both are exports
2. Both are imports
3. Neither is foreign trade
4. Cotton is an export and machinery an import

2. A list of trading partners changes while the product list stays unchanged. What changes most directly?

1. Only population density
2. Only domestic birth rate
3. Direction of trade
4. Only composition of trade

3. Export goods shift from mainly raw materials to more manufactured goods. Which aspect changes?

1. Only household size
2. Composition of trade
3. Only the currency symbol
4. Only partner geography