Test: Opening up of the Indian Economy - Bank Exams MCQ

Special Economic Zones (SEZs) are established to attract foreign investment by offering tax exemptions and essential infrastructure, such as transportation and utilities. This incentivizes foreign companies to set up operations, thereby boosting local economies and creating jobs.

MNCs minimize production costs by establishing operations in regions where labor and resources are cheaper. This strategy allows them to maintain competitive pricing and maximize profit margins while ensuring essential production elements are available.

Increased competition among producers has led to a wider variety of goods and services available to consumers. As domestic and international companies vie for market share, they introduce diverse options, improving quality and reducing prices, which enhances consumer choices significantly.

Small producers face intense competition from larger firms, particularly MNCs, leading many to struggle or close down. This competitive pressure often forces small businesses to sell to larger corporations or adapt quickly to survive in the changing market landscape.

Globalization has led to a decrease in job security for many workers, as companies increasingly prefer hiring on flexible terms. This means that jobs can be less stable, with workers facing the possibility of being let go at any time, reflecting the competitive nature of global markets.

The WTO's primary role is to liberalize international trade by establishing and enforcing rules that govern trade relations between countries. It advocates for the reduction of trade barriers, promoting free trade to enhance global commerce.

Trade liberalization is significant in globalization as it promotes a more competitive and open market by removing trade barriers. This allows countries to engage freely in international trade, benefiting consumers through increased access to diverse products and fostering economic growth.

Increased competition among producers is a significant consequence of foreign trade, leading to a wider selection of products and often driving prices down. This competition can benefit consumers but also poses challenges for local producers who must compete with international firms.

MNCs benefit local companies through joint production by providing financial investments that enhance production capabilities and granting access to advanced technology. This partnership can significantly improve local businesses' efficiency and competitiveness in the market.

Globalization refers to the process by which countries become more interconnected through trade and investment, leading to integrated economies and markets. This interconnectedness enhances economic interactions and cultural exchanges between nations.