In the foreign exchange market, there is another differentiation on the exchange rates: Spot and forward exchange rates. Spot exchange rate, a.k.a benchmark rate or outright rate, is the current exchange rate today for immediate delivery. The corect answer is " E ".

Import tariffs hurt consumers who would like to buy products made in abroad. The consumers may want to save money over domestically produced products, or they may comprehend a degree of quality that is missing in domestically produced products.

Funds used for investments made by a country’s own citizens in a foreign country are called as domestic capital while the funds used for foreign investments in a country are foreign capital.

Anti-dumping duty is a tariff imposed on imports manufactured in overseas countries and priced below the fair market value of similar goods in the domestic market. The government imposes anti-dumping duty on foreign imports when it believes that the goods are being dumped in the domestic market. Anti-dumping duty is imposed to protect local businesses and markets from unfair competition by foreign imports.

Despite significant benefits of tariff, a nation can experience losses from it. The net effect of the tariff on the importing nation as a whole can be determined by combining the effects of the tariff on consumers, producers, and the government. The first key step is to impose a social value judgement.

Economic cooperation has been playing a substantial role in tailoring the diplomatic relations among countries since the ancient times. In this respect, China’s foreign policy constituted on the grounds of military power to protect the Silk Road in the third century BC is a substantial example. International trade has played a very dominant role during both the war and peace times and constituted the hub of economic cooperation among countries. Each of these early developments has helped to the signing of the General Agreement on Tariffs and Trade (GATT) in 1947, which is accepted as the first solid base of today’s multilateral trading system.

Apart from those early steps, II. World War constitutes a landmark on the realization of GATT, which is the predecessor of the World Trade Organization (WTO). It’d be sufficient to have a look at the daring meeting of Churchill and Roosevelt in 1941 to remember how economic cooperation nominates peace and security. This meeting of Churchill and Roosevelt in 1941 paved the way for the famous Atlantic Charter, which was a policy statement of the allies. Certainly, the examination of the Atlantic Charter is out of our scope but mentioning the 5th Clause would be useful to remind the importance of economic cooperation in constructing peace and democracy. The 5th Clause of the Atlantic Charter foresaw fullest cooperation between all countries within the economic matters (United Nations, 1941). Certainly, it is adequate to state that the end of the II. World War gave the opportunity to the Allies to re-shape the international legal, political and economic environment. Post-war international legal and political environment have been designed upon the rules and legislation of the United Nations and International Court of Justice. On the other hand, economic environment was proposed to be constructed upon the World Bank, International Monetary Fund (IMF) and International Trade Organization (ITO).

Since the legal and political re-shaping during the post-war period is out of our scope, we are content with giving brief information on the international economic environment and its main organizations. In this respect, we have to remind the Bretton Woods Conference held in July 1944 so as to discuss postwar international economic order. Bretton Woods Conference ended with the conclusion of establishing the World Bank, the IMF and the ITO, which correspond to a three-pillared structure for the post-war international economic order. These new-proposed institutions were referred to Bretton Woods Institutions.

As also understood from the information given, the correct answer is D. The World Bank, International Monetary Fund (IMF) and International Trade Organization (ITO), which were referred to Bretton Woods Institutions correspond to a three-pillared structure for the post-war international economic order. The information about the other options:

The General Agreement on Tariffs and Trade (GATT) signed in 1947 is accepted as the first solid base of today’s multilateral trading system. The GATT is neither an international organization nor an institution. It is simply an international agreement. GATT is the predecessor of the World Trade Organization.

Purchasing Power Parity (PPP) Theory is based on a principle known as “law of one price”. This law claims that the entirely homogeneous (identical) goods should be sold with the same price even in different markets.

In our world today, most of the countries have been seeking to enjoy increasing returns to scale in international trade. It refers to a condition of decreasing cost of a unit of commodity while its output rate increasing. The correct answer is A.

The value of foreign currency units in terms of each other is called as the cross foreign exchange rate (sometimes shortly cross rate). Therefore, the correct option is A.

According to Fisher Equation, the nominal interest rate in an economy is equal to the sum of the real interest rate and the expected inflation. Therefore, the correct option is C.

GATT Article XXVIII specifies that once members desire to increase their bound rates or to withdraw tariff concessions, they must negotiate and reach agreements with the members with whom they had initially negotiated. In addition, they must enter into consultations with major supplying members that have a substantial interest in any change within the bound rate.

The Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level.

Interlocking ownership, may take the form of reciprocal exchange of stock between large concerns, private stockholdings which establish a community of control among nominally independent enterprises, jointly owned subsidiaries, or the monopolization of an industry’s international trade by a combination of concerns governed by a single holding company. Ordinary restrictive agreement among businessmen, takes the forms from a simple contract to fix prices or allocate sales to an international trade association which maintains an incorporated joint sales agency for its members.

Pound Crisis in European Union member countries in 1993, Tequila Crisis in Mexico and other Latin American countries in 1994, Asian Tigers Crisis in East Asian countries in 1997, Panda Crisis in Russia and other emerging market economies in 1998.

In the post-World War II period, capital flows from developed countries to developing countries have increased significantly. Behind this increase, it is accepted that there are factors such as the growth of multinational companies, expansion of intergovernmental loans and the increase of the efficiency of international organizations (like the IMF, the World Bank and the International Finance Corporation). The correct answer is E.

Suppose that France has a relative abundance of capital and Bangladesh has a relative abundance of labour. Automobiles are capital-intensive to produce, while the textile is labour intensive.

Capital Account: This account fundamentally consists of unilateral transfers occurred in the country with the rest of the world. Since unilateral transfers express unrequited payments among nations, in this account, generally donations a country makes and receives are recorded. Since it usually has a small balance relative to current account, it is sometimes included in the current account balance instead of being considered as a separate account. Therefore, the correct option is D.

Capital Account: This account fundamentally consists of unilateral transfers occurred in the country with the rest of the world. Since unilateral transfers express unrequited payments among nations, in this account, generally donations a country makes and receives are recorded.

Real foreign exchange rate is the value of a domestic currency against foreign currencies corrected for the purchasing power. Cross foreign exchange rate is the value of foreign currency units in terms of each other. Foreign exchange rate is the price of a foreign currency in terms of the domestic currency. Spot exchange rate is the current exchange rate today for immediate delivery. Forward exchange rate is the exchange rate settled today for a payment or delivery that will be consummated in a future date.