Class 12 International Trade (India People and Economy) Mock Test (CBSE)

Topics in International Trade (India People and Economy)

• Changing pattern of India's foreign trade
• Composition of exports
• Composition of imports
• Direction of trade
• International trade through sea routes
• Sea ports
• Airports

International Trade (India People and Economy) practice questions with answers

1. Q1Assertion and reason·1 mark
   Assertion (A): Gold and silver form a significant part of India's import bill. Reason (R): Demand for gold and silver jewellery in India is high, so large quantities are imported.

   1. (a)Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
   2. (b)Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
   3. (c)Assertion (A) is true but Reason (R) is false.
   4. (d)Assertion (A) is false but Reason (R) is true.
   Show answer and step marks

   1. Correct option: (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). High domestic demand for jewellery explains the large import of gold and silver.+1

   Answer: (a)
2. Q2Multiple choice·1 mark
   Which of the following regions accounts for the largest share of India's international trade direction in recent decades?

   1. (a)Asia and Oceania
   2. (b)Latin America
   3. (c)Africa
   4. (d)Eastern Europe
   Show answer and step marks

   1. Correct option: (a) Asia and Oceania+1

   Answer: (a)
3. Q3Multiple choice·1 mark
   Goods such as cotton textiles, engineering goods and leather products, which have been processed in factories before export, are classified as

   1. (a)Primary products
   2. (b)Manufactured goods
   3. (c)Ores and minerals
   4. (d)Agricultural produce
   Show answer and step marks

   1. Correct option: (b) Manufactured goods. These goods have undergone processing in industry, which is the defining feature of manufactured goods.+1

   Answer: (b)
4. Q4Assertion and reason·1 mark
   Assertion (A): Engineering goods form the largest single group of India's imports. Reason (R): Crude oil and petroleum products form the largest single group of India's imports.

   1. (a)Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
   2. (b)Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
   3. (c)Assertion (A) is true but Reason (R) is false.
   4. (d)Assertion (A) is false but Reason (R) is true.
   Show answer and step marks

   1. Correct option: (d) Assertion (A) is false but Reason (R) is true. Crude oil and petroleum products, not engineering goods, form the largest import group.+1

   Answer: (d)
5. Q5Short answer·2 marks
   At a container terminal, an inspector notes a consignment of bullion bars marked as gold and silver, and a separate parcel of pearls and semi-precious stones. Name the import group to which the bullion belongs, and state one reason why India's imports of this group remain high.
   Show answer and step marks

   1. Gold and silver bullion belongs to the separate import group of gold and silver (precious metals), which is listed apart from pearls, precious and semi-precious stones.+1
   2. One reason: strong domestic demand for gold and silver jewellery for festivals and weddings, and their use as a store of value or investment.+1

   Answer: Group: gold and silver (precious metals), listed separately from pearls and precious stones. Reason: high domestic demand for jewellery for festivals and weddings, and their use as a store of value or investment.
6. Q6Long answer·5 marks
   Explain why gold and silver together form a large share of India's import bill, and how these imports affect the country's balance of payments. Give five distinct points in your answer.
   Show answer and step marks

   1. Cultural and traditional demand: gold and silver are widely used for jewellery, ornaments and religious or ceremonial purposes in Indian households, so demand stays high.+1
   2. Store of value and investment: households and institutions hold gold and silver as a safe asset, especially when inflation or economic uncertainty reduces the worth of money.+1
   3. Limited domestic production: India has small reserves and output of gold and silver compared with its demand, so a large part of the requirement must be met through imports.+1
   4. Rising incomes: as incomes and purchasing power grow, demand for gold and silver jewellery and savings in these metals increases, raising import volumes.+1
   5. Effect on balance of payments: these imports are paid for in foreign exchange, which widens the trade deficit, adds pressure on the current account and can weaken the rupee.+1

   Answer: Gold and silver imports are large because of cultural demand, their use as a safe store of value, limited domestic production and rising incomes; they are paid in foreign exchange, which widens the trade deficit and puts pressure on the balance of payments.

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