A 'customs union' differs from a free trade area by having: MCQ with Answer and Explanation

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A 'customs union' differs from a free trade area by having:

A. separate external tariffs

B. a common external tariff

C. a common currency

D. free movement of labour

Answer: Option B

Solution (By JKSSB Mock Tests)

A customs union has a common external tariff along with internal free trade.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'Belt and Road Initiative' is associated with which country?

A. United States

B. China

C. India

D. Japan

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Correct Answer: Option B

Explanation:
The Belt and Road Initiative is a Chinese infrastructure and trade connectivity project.

This question belongs to: Economy GK Economy Set 1

Question #2

In the Mundell-Fleming model under perfect capital mobility and floating exchange rates, monetary policy is:

A. Highly effective in influencing output

B. Effective only in the long run

C. Ineffective in influencing output

D. Completely neutral

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Correct Answer: Option A

Explanation:
Under perfect capital mobility and floating exchange rates, an expansionary monetary policy lowers interest rates, causes capital outflow and currency depreciation, which boosts net exports and output, making monetary policy highly effective.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'Goods and Services Tax' on life insurance premiums is:

A. 0%

B. 18%

C. 5%

D. 12%

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Correct Answer: Option B

Explanation:
Life insurance premiums attract 18% GST.

This question belongs to: Economy GK Economy Set 1

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