1. Many small Hindu businesses at the New Delhi markets prefer to purchase many goods from neighboring China rather than domestically due to lower prices and often better quality. Adam Smith would argue China exports such goods to India because China can produce those goods ____________.

a. less efficiently than India.

b. more efficiently than India.

c. using relatively abundant labor.

d. using relatively abundant capital.

2. In its trade with India, for every dollar China spends buying things in India, India spends three dollars buying from China creating a growing trade deficit. Mercantilists would suggest Indian prime minister Narendra Modi to _____________________. (check all that apply)

a. encourage more export to China.

b. Limit imports from China

c. restrict export to China.

d. encourage more import from China.

3. In its trade with India, for every dollar China spends buying things in India, India spends three dollars buying from China creating a growing trade deficit. David Ricardo would suggest Indian prime minister Narendra Modi to _____________________. (check all that apply)

a. expand trade with China.

b. expand only export to China.

c. restrict trade with China.

d. restrict only import from China.

4. Based on the information from the video and the overview to this case about the new economic agreements between China and India, we can conclude that these two countries will have ________________ in 2015−2016. (check all that apply)

a. greater bilateral FDI flows

b. completely free trade

c. no trade

d. greater bilateral trade volumes

5. India and China have agreed on the $20 billion of investments from China over the next 5 years to develop further infrastructure in India. Thus, $20 billion will be ______________ of FDI to India and ___________________ of FDI from China.

a. stock; outflows

b. inflows; stock

c. inflows; outflows

d. stock; flow

6. As FDI from China to build new infrastructure in India will increase over the next 5 years, we will expect India to derive the following potential benefits from this FDI. (check all that apply)

a. New jobs to build infrastructure

b. More capital to build infrastructure

c. Technology transfer

d. New local jobs

7. The goals of the concluded bilateral agreements between China and India are to create

a. political union.

b. None of these.

c. free trade area.

d. customs union.