Correct : A. national resources, labor, physical capital and human capital
2. The Heckscher- Ohlin model is principally focused on what aspect of economics?
Correct : A. international trade
3. A no-trade world will have which of the following characteristics:
Correct : D. all of the above
4. Transportation cost of trade affects:
Correct : D. all of the above
5. International Trade is most likely to generate short-term unemployment in:
Correct : B. import-competing industries
6. What was the first economic theory of international trade to be developed?
Correct : A. the theory of mercantilism
7. According to Adam Smith, the trade between countries should happen _____.
Correct : D. only when a country has an absolute advantage
8. If a nation has an open economy it means that the nation:
Correct : D. conducts trade with other countries
9. International trade forces domestic firms to become more competitive in terms of
Correct : D. all of the above
10. The movement to free international trade is most likely to generate short-term unemployment in which
industries
Correct : B. import-competing industries.
11. According to the principle of comparative advantage:
Correct : A. south korea should export steel
12. Country A has an absolute advantage in
Correct : B. product y
13. Globalization refers to:
Correct : D. a more integrated and interdependent world
14. Comparative Cost Trade Theory is given by
Correct : B. david ricardo
15. ……………...is the payment method most often used in International Trade which offers the exporter best
assurance of being paid for the products sold internationally.
Correct : B. letter of credit
16. Key controllable factors in global marketing are:
Correct : C. marketing activities and plans
17. The first phase of globalization started around 1870 and ended with …..
Correct : A. world war i
18. According to this theory, the holdings of a country’s treasure primarily in the form of gold constituted its
wealth.
Correct : C. mercantilism
19. The Theory of Absolute Cost Advantage is given by
Correct : B. adam smith
20. The Theory of Relative Factor Endowments is given by
Correct : D. ohlin and hecksher
21. The theory of comparative cost advantage is given by
Correct : A. david ricardo
22. A multinational is a firm that controls and manages production facilities in
Correct : B. at least two countries
23. Locational advantages are based on which combination of the following specific country characteristics
Correct : A. a large reserve of natural resources, a large local market and efficiency opportunities
24. Horizontal integration occurs when
Correct : B. firm creates multiple production facilities, each of which produces the same good or goods.
25. Which of the following would be an example of foreign direct investment from the United States to
Taiwan?
Correct : B. a u.s. car manufacturer enters into a contract with a taiwan firm to make and sell it spark plugs.
26. If a German manufacturer of household appliances wants to take advantage of the cheaper labor available
in the Czech Republic, which of the following actions will not serve that purpose?
Correct : B. build a plant in the czech republic and send all german workers to operate it.
27. Which of the following was created in an effort to promote free trade?
Correct : A. world trade organization
28. . Removing barriers or restrictions set by the government is called:
Correct : A. liberalisation
29. Which is the right sequence of stages of Internationalization
Correct : B. domestic, international, multinational, global, transnational
30. Subsidiaries consider the regional environment for policy / Strategy formulation is known as
Correct : B. regionocentric approach
31. . Which is not an Indian Multinational Company?
Correct : A. unilever
32. Select example of Indian Multinational Company
Correct : B. videocon
33. …………………corporation produces in the home country or in a single country and focuses on marketing
these products globally or vice a versa.
Correct : A. global
34. The —————-company produces, markets, invests and operates across the world
Correct : C. transnational
35. Business across several countries with some decentralization of management decision making to
subsidiaries is
Correct : B. multinational business.
36. Immobility of labor among nations is
Correct : B. relatively of a higher degree than among regions in the same country.
37. The following factor does not differentiate international business from domestic business
Correct : B. product quality
38. By entering into international business, a firm expects improvement in
Correct : C. any or all spheres of marketing, operation and finance.
39. Ultimately ………………was replaced by the …………….on 1st Jan 1995
Correct : C. gatt, wto
40. _______ is the first step in the internationalization process.
Correct : A. license
41. In the foreign exchange market, the ________ of one country is traded for the ________ of another
country.
Correct : A. currency; currency
42. By definition, currency appreciation occurs when
Correct : C. the value of one currency rises relative to another currency.
43. Hedging is used by companies to:
Correct : D. decrease the variability of expected cash flows
44. Exchange rates
Correct : B. fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied
45. If the U.S. dollar appreciates relative to the British pound,
Correct : A. it will take fewer dollars to purchase a pound
46. A floating exchange rate
Correct : D. is allowed to vary according to market forces
47. In a quote exchange rate, the currency that is to be purchase with another currency is called the
Correct : D. base currency
48. An economist will define the exchange rate between two currencies as the:
Correct : A. amount of one currency that must be paid in order to obtain one unit of another currency
49. India is facing continuous deficit in its balance of payments. In the foreign exchange market
rupee is expected to
Correct : A. depreciate.
50. The demand for domestic currency in the foreign exchange market is indicated by the following
transactions in balance of payment
Correct : C. export of goods and services and capital inflows.
51. The price at which a market maker is prepared to buy (a currency) or borrow (money) is termed as
Correct : B. bid rate
52. The __________ is especially well suited to offer hedging protection against transactions risk exposure.
Correct : A. forward market
53. Difference between buying and selling rates in an exchange rate is known as
Correct : B. spread
54. Exchange rate between currency A and currency B, given the values of currencies A and B with respect to
a third currency is known as
Correct : D. cross exchange rate
55. The swap arrangement where principal amounts are not exchanged, but periodical payments will be
Correct : C. interest rate swap.
56. What is FEMA?
Correct : C. foreign exchange management act
57. ______________ involve the exchange of currency the second day after the date on which the two
foreign exchange traders agree to the transaction.
Correct : A. spot transactions
58. Outright forward transactions involve the exchange of currency beyond three days at a fixed exchange
rate, known as the:
Correct : B. forward rate
59. The biggest market for foreign exchange is which of the following?
Correct : C. london
60. The ______________ is the price at which the trader is willing to buy foreign currency.
Correct : B. bid
61. Which of the following is the price at which the trader is willing to sell foreign currency?
Correct : C. offer
62. .………is only a legal agreement and it is not an institution, but ….. is a permanent institution.
Correct : A. gatt, wto
63. The WTO was established to implement the final act of Uruguay Round agreement of ……
Correct : B. gatt
64. WTO stands for
Correct : C. world trade organization
65. What is the name of the international organization that fosters monetary and financial cooperation
and serves as a bank for central banks?
Correct : D. bank for international settlements
66. Which of the following are institutional banks that provide financial support and professional advice for developing countries?
Correct : A. multilateral development banks
67. In the foreign exchange market, the ________ of one country is traded for the ________ of another
country.
Correct : B. currency; financial instruments
68. Which of the following examples definitely illustrates a depreciation of the U.S. dollar?
Correct : D. the dollar exchanges for 120 francs and then exchanges for 100 francs
69. Interest rate swaps are usually possible because international financial markets in different countries
are
Correct : C. imperfect
70. The exchange rate is the
Correct : D. price of one country’s currency in terms of another country’s currency
71. A speculator in foreign exchange is a person who
Correct : A. buys foreign currency, hoping to profit by selling it a a higher exchange rate at some later date
72. Under a gold standard,
Correct : A. a nation’s currency can be traded for gold at a fixed rate
73. The Bretton Woods accord
Correct : C. of 1944 formulated a new international monetary system after the collapse of the gold standard
74. The current system of international finance is a
Correct : D. managed float exchange rate system
75. Ask quote is for
Correct : A. seller
76. A simultaneous purchase and sale of foreign exchange for two different dates is called
Correct : B. currency swap
77. The basic objective of export Promotion Council is to promote and develop the Exports of the
Correct : D. overall exports of the country.
78. The main promoter of trade liberalization was
Correct : A. gatt
79. _______________ is an important reason for economic integration.
Correct : A. geographic proximity
80. In which of the following types of regional economic integration are internal tariffs eliminated
with member countries levying a common external tariff on goods being imported from nonmembers.
Correct : A. customs union
81. A _______________ focuses on eliminating internal tariffs with member countries levying a common
external tariff on goods being imported from nonmembers. Additionally, this type of regional economic
integration allows free mobility of production factors such as labor and capital.
Correct : B. common market
82. _______________ occurs when production shifts to more efficient producers for reasons of
comparative advantage, allowing consumers access to more goods at a lower price than would have
been possible without integration.
Correct : C. trade creation
83. Which of the following was developed with the rationale that the U.S.-Canadian trade was the largest
bilateral trade in the world and that the United States is Mexico’s and Canada’s largest trading partner?
Correct : B. nafta (the north american free trade agreement)
84. _______________ occurs when trade shifts to countries in the group at the expense of trade with
countries not in the group, even though the nonmember country might be more efficient in the absence
of trade barriers.
Correct : D. trade diversion
85. NAFTA calls for all of the following EXCEPT:
Correct : C. the implementation of a common currency
86. NAFTA is a good example of:
Correct : D. trade diversion.
87. Where is the headquarters of the EU?
Correct : A. belgium
88. Apart from India, Pakistan and Bangladesh who are the other member countries of SAARC?
Correct : C. nepal, bhutan, maldives, sri lanka and afghanistan
89. Which of the following is not the main purpose for formation of SAARC
Correct : C. to form mutual defense against foreign aggression
90. SAPTA is a trade agreement by _________________
Correct : C. saarc nations
91. What is the full form of ASEAN?
Correct : A. association of south east asian nations
92. The European Union is a free trade association that is based on a(n)
Correct : A. economic and monetary union.
93. Which one of the following has a single currency managed by a common central bank?
Correct : B. european union
94. Which one of the following is renowned for its high-quality databases on economic and social data?
Correct : C. oecd
95. The main reason behind MNCs investments are
Correct : D. to increase the assets and earn profits.
96. Which institute supports investments and foreign trade in India?
Correct : B. world trade organisation (wto)
97. Within an international context, what are 'economies of scope' synonymous with?
Correct : D. all of the above.
98. According to the concept of the value chain, of an international firm is profitable if:
Correct : A. the value it commands exceeds the costs involved in creating the product
99. When Safeway supermarkets in the United States buys strawberries from Mexico,
Correct : C. it must use pesos to pay mexican farmers.
100. A country records its international finance accounts in it’s