Students get through the TN Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization which is useful for their exam preparation.

TN State Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization

Very short answer questions

Question 1.
What is Globalization?
Answer:

  1. Globalization results from the removal of barriers between national economies to encourage the flow of goods, services, capital, and labor.
  2. Removal of tariffs and quotas that restrict free and open trade among nations has helped globalize the world economy.

Question 2.
Mention any three disadvantages of globalization.
Answer:

  1. Loss of domestic industries.
  2. Increase in inequalities.
  3. The dominance of foreign Institutions.

TN Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization

Question 3.
State the measures of Liberalization adopted by the Government of India.
Answer:

  1. Liberalization for Industrial licensing.
  2. Freedom for expansion and production.
  3. Increase in the investment limit of the small industries.
  4. Foreign exchange reforms.
  5. Liberalization of export and import transaction.

Question 4.
List out the advantages of Privatization.
Answer:

  1. Increase in efficiency.
  2. Professional Management.
  3. Increase in competition.
  4. Reduction in the economic burden of Government.

Question 5.
What is a Memorandum of Understanding?
Answer:

  1. Memorandum of the Understanding system was introduced in 1991 to raise the productivity and performances of PSUs.
  2. It strengthens the relationship between PSUs and administrative departments.

TN Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization

Question 6.
Explain the reason for Privatization.
Answer:

  1. PSUs were running in losses due to mismanagement and political interference.
  2. The managers could not work independently.
  3. The production capacity remained under-utilized.

Question 7.
Define Disinvestment.
Answer:
Disinvestment means selling of Government securities of Public Sector Undertakings (PSUs) to other PSUs or Private sectors or banks.

Question 8.
Explain disinvestment in PSUs.
Answer:
The Government has started the process of disinvestment in those PSUs which had been running into loss. It means that Government has been selling out these industries to the private sector. So disinvestment is a system of privatizing Government enterprises.

Short answer questions

Question 1.
State any three impacts on Privatization.
Answer:

  1. Privatization has a positive impact on financial growth by decreasing deficits and debts.
  2. Increase in the efficiency of Government undertakings.
  3. Provide better goods and services to the consumers.
  4. Making way for Foreign Direct Investment (FDI).

TN Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization

Question 2.
Discuss Forms of Globalization.
Answer:

  1. Foreign trade policy: India has signed a number of agreements in order to expand Indian trade worldwide. Some of the agreements include TRIPs, GATs.
  2. Export promotion: It promotes export by reducing quotas and tariffs by eliminating trade restrictions and by simplifying trade procedures.
  3. Reduction in tariffs: Custom duties and tariffs imposed on imports and exports are reduced gradually to make the Indian economy attractive to global investors.
  4. Encouraging open competition: Domestic companies start their operations at the international level and there is an open competition.

Question 3.
What are the disadvantages of globalization?
Answer:

  1. Loss of domestic industries: It causes a decline in the demand for domestic products which in turn vanishes the domestic business.
  2. Increase in inequalities: Globalization widens the gap between rich and poor. Also, developed countries exploit the resources of developing countries.
  3. The dominance of foreign Institutions: Economic power shifts from independent industries to international organizations which is a threat to national sovereignty.

Question 4.
Explain the reasons for implementing LPG.
Answer:

  1. Excess of consumption and expenditure over revenue resulting in heavy Government borrowings.
  2. Growing inefficiency in the use of resources.
  3. Mismanagement of the firm and the economy.
  4. Increases in losses for Public Sector enterprises.
  5. Low foreign exchange reserves.
  6. Inflation.

TN Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization

Long answer questions

Question 1.
Explain the impact of Liberalization on the Indian Economy.
Answer:

  1. The phenomenal growth by contributing $1.3 Trillion to the world GDR So the Indian economy because of the Seventh Largest among the world-leading economies.
  2. Liberalization has opened up new business opportunities abroad and increased foreign direct investment.
  3. Newmarket for various goods came into existence and resulted not only in urban but also in rural development.
  4. It became very easy to obtain loans from banks for business expansion.
  5. “Foreign Collaboration” is the latest outcome of Liberalization.
  6. A number of multinational companies started operating worldwide including India.

Question 2.
Globalization and Liberalization are concepts closely related to one another. Explain.
Answer:

  1. Both globalization and liberalization refer to relaxing social and economic policies which results in better integration with an economy and between nations.
  2. Both occur as a result of modernization.
  3. Globalization is the greater integration among countries and economies for trade-economic social and political benefits.
  4. Liberalization generally refers to the removal of restrictions, usually Government rules and regulations imposed on socio, economic or political matters.

TN Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization

Question 3.
Explain the disadvantages of Privatization.
Answer:

  1. Lack of welfare: The majority of private companies whose main aim or motive is profit-making, do not indulge in public interest or welfare services like free education to the poor, free medical treatment, etc.
  2. Political pressure: When private companies fail to deliver, the public has no power to intervene and Government does not always have time or expertise to force them to keep their promises.
  3. Ignores the weaker sections: Privatization often goes hand in hand with encouraging rich people to pay more and opt for the best quality services. This leads to division, making it harder to provide excellent public services for weaker sections.

Multiple-choice questions

1. International Bank for Reconstruction and Development (IBRD) popularly known as:
(a) World Bank
(b) IMF
(c) WTO
(d) None
Answer:
(a) World Bank

2. ……….. is the result of a new industrial policy that abolished the “License System”.
(a) Liberalization
(b) Privatization
(c) Globalization
(d) Foreign Direct Investment
Answer:
(a) Liberalization

TN Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization

3. ………. making way for Foreign Direct Investment (FDI).
(a) Liberalization
(b) Privatization
(c) Globalization
(d) All the above
Answer:
(b) Privatization

4. ………. has opened up new business opportunity and increase Foreign Direct Investment.
(a) Liberalization
(b) Globalization
(c) Privatization
(d) None
Answer:
(a) Liberalization

5. ……….. promotes export by reducing Quotas and Tariffs.
(a) GAT’s
(b) TRIPs
(c) Globalization
(d) PSUs
Answer:
(c) Globalization

6. Find out the modes of foreign collaboration:
(a) Joint Venture
(b) Merger
(c) Franchise
(d) All the above
Answer:
(d) All the above

TN Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization

7. ………. paves way for a company to enter a foreign market.
(a) Migration
(b) Technological advancement
(c) Tariff
(d) Agreements (Trade)
Answer:
(b) Technological advancement

8. ………. has led to a boom in the consumer products market.
(a) Privatization
(b) Liberalization
(c) Globalization
(d) TRIPs
Answer:
(c) Globalization

9. In which barriers can lead to lower prices for consumers:
(a) Tariff
(b) Surcharges
(c) Competition
(d) None
Answer:
(a) Tariff

10. ……….. paves way for an employment opportunity in the home country.
(a) Globalization
(b) Privatization
(c) Liberalization
(d) GATS
Answer:
(a) Globalization

11. By eliminating trade restriction and by simplifying trade procedure:
(a) WTO
(b) TRIPs
(c) IMF
(d) Globalization
Answer:
(d) Globalization

TN Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization

12. Globalization of technology is done by:
(a) Royalty
(b) Purchase of technology
(c) Technology Collaborations
(d) All the above
Answer:
(d) All the above

13. By attracting more foreign investment through:
(a) Liberalization
(b) WTO
(c) TRIPs
(d) GATS
Answer:
(a) Liberalization

14. Give an example for Public Sector Undertakings (PSUs):
(a) Railway
(b) Defence
(c) Atomic Energy
(d) All the above
Answer:
(d) All the above

15. ………….. widens the gap between rich and poor.
(a) Privatization
(b) Globalization
(c) Trade
(d) Deregulation
Answer:
(b) Globalization