(i) Foreign Direct Investment or FDI is defined as the investment made by a company in the company situated outside the country.
(ii) Foreign Institutional Investor or FII is when investors, most commonly in the form of institutions that invest in the country’s financial market

FDI is not permitted in the industrial sectors like,
(i) Arms and ammunition
(ii) atomic energy,
(iii) railways,
(iv) coal and lignite and
(v) mining of iron, manganese, chrome, gypsum, sulphur, gold, diamonds copper etc.,

(i) Countries following the fixed exchange rate (also known as stable exchange rate and pegged exchange rate) system agree to keep their currencies at a fixed rate as determined by the Government.
(ii) Under the gold standard, the value of currencies was fixed in terms of gold

Indian rupee was devalued three times since 1947.
1. On 29th September, 1949.
2. On 6th June, 1966
3. On 1st July, 1991

1. Monetary Contraction / Expansion
2. Devaluation/ revaluation
3. Exchange Control

1. There are two countries and two commodities (2 x 2 model).
2. Labour is the only factor of production.
3. Labour units are homogeneous.
4. The cost or price of a commodity is measured by the amount of labour required to produce it.
5. There is no transport cost.

1. Pure Theory of Trade
2. Policy Issues
3. International Cartels and Trade Blocs
4. International Financial and Trade Regulatory Institutions

(i) Exchange control means the state intervention in the forex market.
(ii) It is a popular method employed to influence the balance of payment position of a country.

The rate at which one currency is exchanged for another currency.

(i) The balance between the values of goods and services exchanged between two countries.
(ii) It is a trade in both visible and non visible items.

The rate at which goods of one country are exchanged for that of another country i.e. ratio of export price and import price.

(i) According to Adam Smith, the basis of international trade was absolute cost advantage.
(ii) To Ricardo the basis of trade is comparative cost advantage.
(iii) Trade can take place even if the absolute cost difference is absent but there is comparative cost difference.

(i) Availability of variety of goods for consumption.
(ii) Generation of more employment.
(iii) Industrialization of backward nations.
(iv) Division of labour and specialisation.

(i) International trade refers to the trade or exchange of goods and services between two or more countries.
(ii) It is a trade among different countries or trade across political boundaries.

International Economics is a specialized field of Economics that deals with the economic interdependence among countries and studies the effects of such interdependence and the factors that affect it.