Foreign Trade Policy, Foreign Investments And Economic Development JAIIB MCQs | Paper I – Indian Economy & Indian Financial System

IE&IFS Chapter 8 Foreign Trade Policy, Foreign Investments and Economic Development

Test your knowledge of Chapter 8: Foreign Trade Policy, Foreign Investments and Economic Development with this JAIIB MCQs Practice Pack, covering key topics such as: 📌 Topics Covered:

Foreign Trade Policy (FTP) and its evolution
FTP 2015-2020, the new FTP 2023, and future challenges
Foreign Direct Investment (FDI) vs. Foreign Institutional Investment (FII)
FDI routes, types, and prohibited sectors
The difference between Economic Development and Economic Growth
Key indicators of development like the Human Development Index (HDI) ✅ Correct answers with explanations are provided at the end for effective revision. Sharpen your preparation, identify weak areas, and build exam confidence with these practice questions. Stay consistent. Stay exam-ready. 📚 For more daily quizzes, PDFs, and complete JAIIB study material, visit bankingshiksha.com.

1 / 10

1. Which statement best describes the difference between Economic Growth and Economic Development?

A. Economic Growth is a broader concept that includes improvements in quality of life, while Economic Development only measures the increase in national income.

B. Economic Growth focuses on the quantitative increase in a country's output (like GDP), while Economic Development is a broader, qualitative concept that includes poverty reduction and improved living standards.

C. The two terms are identical and can be used interchangeably.

D. Economic Growth is measured by the Human Development Index (HDI), while Economic Development is measured by GDP.

2 / 10

2. What is the fundamental difference between Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII/FPI)?

A. FDI is a short-term investment in financial assets, while FII is a long-term investment in physical assets.

B. FDI is considered stable, long-term investment in production, while FII is short-term, volatile investment in financial markets ("hot money").

C. FDI can only be done by individuals, while FII is done by companies.

D. There is no significant difference between the two types of investment.

3 / 10

3. What is a key new feature of the Foreign Trade Policy (FTP) 2023 that makes it different from previous five-year policies?

A. It has a fixed end date of 2028 to provide long-term stability.

B. It is a dynamic and open-ended policy with no fixed end date, allowing for updates as needed.

C. It focuses exclusively on restricting imports and promoting self-sufficiency.

D. It replaces all incentive schemes with direct cash subsidies for exporters.

4 / 10

4. A foreign automobile company builds a brand new manufacturing plant and showroom in India to produce and sell cars for the local market. What type of Foreign Direct Investment (FDI) is this an example of?

A. Brownfield FDI

B. Joint Venture FDI

C. Portfolio FDI

D. Greenfield FDI

5 / 10

5. When foreign investment is permitted in a particular sector without requiring any prior approval from the Government of India or the RBI, what is this entry path called?

A. The Government Route

B. The Automatic Route

C. The Prohibited Route

D. The FII Route

6 / 10

6. Complete the following sentence: A key initiative of the Foreign Trade Policy 2023 is to boost grassroots-level exports by identifying and promoting unique products from every district in the country, a concept known as __________.

A. Make in India

B. Districts as Export Hubs (DEH)

C. Services from India Scheme (SEIS)

D. Smart Cities Mission

7 / 10

7. Complete the following sentence: Short-term foreign investment in a country's financial assets like stocks and bonds is often referred to as "__________" because it is volatile and can be withdrawn quickly during economic uncertainty.

A. Stable Capital

B. Patient Money

C. Hot Money

D. Greenfield Investment

8 / 10

8. Which of the following statements about the Foreign Trade Policy (FTP) 2015-2020 is TRUE?

A. Its primary goal was to reduce India's total exports to protect domestic industries

B. It introduced the Services Exports from India Scheme (SEIS) to promote the export of notified services.

C. It successfully achieved its ambitious export target of USD 900 billion by 2020.

D. It increased the amount of physical paperwork required for trade facilitation to improve security.

9 / 10

9. Which of the following statements regarding Foreign Direct Investment (FDI) policy in India is TRUE?

A. FDI is permitted in all sectors without any restrictions, including lottery and gambling.

B. The government prohibits FDI in the manufacturing of tobacco products.

C. The FDI limit in Public Sector Banking is 100% through the automatic route.

D. Multi Brand Retail Trading is a sector where 100% FDI is allowed automatically.

10 / 10

10. Use the following table to find the correct match.

Column A (Term/Indicator)	Column B (Represents/Measures)
1. GDP	a. A reward scheme for merchandise exports under FTP 2015-20.
2. Human Development Index (HDI)	b. A long-term investment made by a foreign entity to control ownership.
3. MEIS	c. A quantitative measure of a country's total output (Economic Growth).
4. FDI	d. A qualitative measure of well-being and living standards (Economic Development).

Question : From the table above, which of the following is a correct match?

A. 1-d

B. 2-d

C. 3-b

D. 4-a

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