IGCSE Economics Paper-1: Specimen Questions with Answers 30 - 30 of 64

Question 30

Edit

Question

MCQ▾

What will happen if the US government removes the quota on the import of cars?

Choices

Choice (4)
a.Balance on trade in goods-Worsens, Balance on trade in services-No change
b.Balance on trade in goods-Improves, Balance on trade in services-Worsens
c.Balance on trade in goods-Worsens, Balance on trade in services-Worsens
d.Balance on trade in goods-Improves, Balance on trade in services-No change

Answer

a.

Explanation

  • BOT measures the relative strength of a country’s economy. The balance of trade is also known as the trade balance or the international trade balance. A country has a trade deficit if it imports more goods and services than it exports in terms of value. On the other hand, a country that exports more goods and services than it imports has a trade surplus.
  • The formula for calculating the Balance of Trade will be,
    • BOT
  • Countries use quotastradetradeuotasimports. in to regulate the volume of between them and other countries. Countries sometimes impose them on specific products to reduce imports and increase domestic production. Q boost domestic production by restricting
  • If US government removes quota then the balance of trade and services both will worsen, as the gap between both the accounts will increase.

Choose Paper