SECTION A

Part One: Multiple Choice
Ans.1 B. Location
Ans.2. D . All of the above
Ans.3. B. Price
Ans.4. A. 1958
Ans.5.C. 1990
Ans.6. C. Culture
Ans.7. A. Product
Ans.8. C. Trademark
Ans.9. A. Global Market
Ans.10. C. Evaluative process

PART- II
1. What do you understand by “ Inward-oriented Policies”?

Ans. An inward- oriented policy, usually , means over protection. What is less obvious is that sheltering domestic industries puts exports at a great disadvantage because it raises the cost of the foreign inputs used in their production. Moreover, an increase in the relative costs of domestic inputs may also occur through inflation or because of appreciation of the exchange rate as import restrictions are introduced. In practice, the distinction between inward-looking and outward looking approaches gets blurred. Most of the less developed countries have employed both strategies with different degrees of emphasis at one time or another

2. What is ‘Factor Endowments Theory’?

Ans. The factor endowment theory was developed by Swedish economist Eli Heckscher and his student Bertil Ohlin. This theory consists of two important theorems, namely, the Heckscher-Ohlin theorem and the factor price equalization theorem. TheHeckscher-Ohlin theorem examines the reasons for comparative cost differences in production and states that a country has comparative advantage in the production of that commodity which uses more intensively the country’s more abundant factor. The factor price equalization theorem examines the effect or international trade on factor prices and states that free international trade equalizes factor prices between countries, relatively and absolutely, and thus serves as a substitute for international factor