International Business MCQs with Answers

Question-1. Which one of the following is not amongst India's major trading partners?

1. New Zealand
2. USA
3. UK
4. Germany

Question-2. ____________ is the payment method most often used in International Trade which offers the exporter best assurance of being paid for the products sold internationally.

1. Drafts
2. Bill of Lading
3. Letter of Credit
4. Open Account

Question-3. A member in IMF, has a reserve tranche position in the IMF to the extent that its quota exceeds

1. None of the above
2. The borrowings of its currency in IMF
3. The IMP's holdings of its currency in the special disbursement account
4. The IMF's holding of its currency in the General Resources

Question-4. A no-trade world will have which of the following characteristics:

1. all of the above
2. Countries will have same relative endowments of production factors
3. Consumers across countries will have identical and homogenous tastes
4. There will be no distortions or externalities

Question-5. A tariff fails to restrict imports when the demand for imports is

1. None of the above
2. Perfectly price elastic
3. Price inelastic
4. Of unitary price elasticity

Question-6. According to Adam Smith, the trade between countries should happen _____.

1. Only when a country has an absolute advantage
2. Naturally according to the market forces
3. Under government regulation
4. Using factors that are available

Question-7. According to the credit tranche policy of the IMF, credit is made available in

1. Four tranches, each equivalent to 25% of country's SDRs
2. Five tranches, each equivalent to 20% of country's qouta
3. Four tranches, each equivalent to 25% of country's quota
4. Ten tranches, each equivalent to 10% of country's SDRs

Question-8. According to the principle of comparative advantage:

1. Japan should export steel and DVDs
2. South Korea should export steel
3. South Korea should export steel and DVDs
4. Japan should export steel

Question-9. According to this theory, the holdings of a countries treasure primarily in the form of gold constituted its wealth.

1. Hecksher Theory
2. Gold Theory
3. Ricardo Theory
4. Mercantilism

Question-10. Balance of Payment can be made favourable if

1. (A) and (C).
2. Exports are increased
3. Imports are increased
4. Devaluation of money

Question-11. Bilateral arrangements instituted to restrain the rapid growth of exports of specific manufactured goods, are called

1. None of the above
2. Administered protection
3. Voluntary export restraints
4. Imposed export restraints

Question-12. Comparative Cost Trade Theory is given by

1. Heckscher Ohlin
2. Adam Smith
3. David Ricardo
4. Gottfried Haberle

Question-13. Globalization refers to:

1. A more integrated and interdependent world
2. Lower incomes worldwide
3. Less foreign trade and investment
4. Global warming and their effects

Question-14. How is comparative advantage defined?

1. Globalization, growing economic linkages among countries.
2. You produce the things you are especially good at, and buy from others, the goods you are less efficient in producing.
3. To produce and consume all goods without trade.
4. How the world actually works.

Question-15. How many countries have been undertaken to lend to IMF if there is need to cope with an impairment of the International monetary system?

1. 20
2. 11
3. 50
4. 15

Question-16. If a commodity X is subject to an import duty of 25% ad valorem, the nominal tariff is

1. 2.50%
2. 50%
3. 25%
4. 12.50%

Question-17. If a nation has an open economy it means that the nation:

1. Conducts trade with other countries
2. Allows private ownership of capital.
3. Has flexible exchange rates
4. Has fixed exchange rates

Question-18. In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in

1. tastes
2. Military capabilities
3. labor productivities
4. relative availabilities of factors of production

Question-19. Increased foreign competition tend to

1. Increase profits of domestic import-competing industries
2. Intensify inflationary pressure at home
3. Induce falling output per worker-hour for domestic workers
4. Place constraints on the wages of domestic workers

Question-20. Interest payments on loans borrowed abroad are recorded in

1. Official Reserve Account
2. Capital Account
3. Current Accounts
4. Errors and Omission Section

Question-21. International trade forces domestic firms to become more competitive in terms of

1. All of the above
2. The introduction of new products
3. Product design and quality
4. Product price

Question-22. International Trade is most likely to generate short-term unemployment in:

1. Industries that sell to only foreign buyers
2. Industries in which there are neither imports nor exports
3. Import-competing industries
4. Industries that sell to domestic and foreign buyers.

Question-23. Key controllable factors in global marketing are:

1. all of the above.
2. Government policy and legislation
3. social and technical changes
4. marketing activities and plans

Question-24. Mercantilists believed that a country could increase the amount of wealth it had by _____.

1. Increasing both imports and exports
2. Promoting exports and discouraging imports
3. Discouraging exports and promoting imports
4. Controlling imports and exports

Question-25. Nations conduct international trade because:

1. Interest rates are not identical in all trading nations
2. Some nations prefer to produce one thing while others produce other things.
3. Resources are not equally distributed among all trading nations.
4. Trade enhances opportunities to accumulate profits.

Question-26. Quotas of all IMF members are reviewed at intervals of

1. Two years
2. Five years
3. Not more than five years
4. Three years

Question-27. The first phase of globalization started around 1870 and ended with …..

1. In 1913 when GDP was High
2. World War I
3. World War II
4. The Establishment of GATT

Question-28. The Heckscher- Ohlin model is principally focused on what aspect of economics?

1. Production possibility frontier
2. International trade
3. Supply and demand
4. Normative economics

Question-29. The movement to free international trade is most likely to generate short-term unemployment in which industries

1. Industries that sell to only foreign buyers
2. Industries in which there are neither imports nor exports
3. Import-competing industries.
4. Industries that sell to domestic and foreign buyers

Question-30. The opportunity cost of one DVD in Japan:

1. Four tons of steel
2. One ton of steel
3. Two tons of steel
4. Three tons of steel

Question-31. The Theory of Absolute Cost Advantage is given by

1. Ohlin and Heckscher
2. David Ricardo
3. Adam Smith
4. F W Taylor

Question-32. The world bank is known as

1. Both (b) & (c)
2. IMF
3. IDA
4. IBRD

Question-33. Transportation cost of trade affects:

1. all of the above
2. pattern of trade
3. boundaries between tradable and non-tradable goods
4. Global supply chains

Question-34. Under which system of valuation, SDRs were valued in terms of 16 currencies, which were assigned specific weights?

1. None of the above
2. Standard basket valuation
3. Standard charted valuation
4. Various currencies valuation

Question-35. What are the four factor endowments?

1. International differences in climate
2. National resources, labor, physical capital and human capital
3. Types of technology
4. Material inputs used up in the process of production

Question-36. What was the first economic theory of international trade to be developed?

1. The Heckscher-Ohlin theory
2. The theory of mercantilism
3. The theory of comparative advantage
4. The theory of absolute advantage

Question-37. Which of the following are included in the permanent facility for specific purpose of IMF?

1. All of the above
2. The compensatory and contingency financing facility.
3. The buffer stock financing facility
4. The extended facility

Question-38. Which of the following is the criteria for approving an IDA credit?

1. All of the above
2. Poverty test
3. Performance test
4. Project test

Question-39. Which of the following is true about the Board of Governors of IMF?

1. They are elected annually
2. They meet once a year
3. They may vote by mail at other times except the annual meeting
4. Both (A) and (B)

Question-40. Which of the following trade policies limits specified quantity of goods to be imported at one tariff rate?

1. All of the above
2. Quota
3. Import tariff
4. Specific tariff

Question-41. Which one is not an international organization

1. CBDT
2. SAARC
3. ASEM
4. ASEAN

Question-42. Which one is not international Institution?

1. TRAI
2. IMF
3. IDA
4. IBRD

Question-43. Which type of elasticity plays a crucial role in determining international trade?

1. Cross elasticity of demand
2. Elasticity of demand
3. Price Elasticity of demand
4. Income elasticity of demand

Question-44. _______ is the first step in the internationalization process.

1. Export
2. License
3. Foreign Investment
4. Sales

Question-45. _________________is the application of knowledge which redefines the boundaries of global business

1. Economy
2. Cultural Values
3. Society
4. Technology

Question-46. According to this theory, the holdings of a country's treasure primarily in the form of gold constituted its wealth.

1. Hecksher Theory
2. Gold Theory
3. Ricardo Theory
4. Mercantilism

Question-47. IBRD (International Bank for Reconstruction and Development) also known as

1. International Bank
2. Exim Bank
3. World Bank
4. International Monetary fund

Question-48. In which of the following modes of entry, does the domestic manufacturer give the right to use intellectual property such as patent and trademark to a manufacturer in a foreign country for a fee

1. None of these
2. Licensing
3. Contract manufacturing
4. Joint venture

Question-49. NAFTA stands for

1. Northern association for trade
2. North African trade association
3. North American free trade agreement
4. Northern Atlantic trade agreement

Question-50. Outsourcing a part of or entire production and concentrating on marketing operations in international business is known as

1. Joint venture
2. Licensing
3. Franchising
4. Contract manufacturing

Question-51. Select example of Indian Multinational Company

1. Tesco
2. Hindusthan Unilever
3. Videocon
4. Cargill

Question-52. The _______________ company produces, markets, invests and operates across the world

1. Multinational
2. Global
3. International
4. Transnational

Question-53. The main promoter of trade liberalization was

1. CISA
2. GATT
3. NAFTA
4. CEPTA

Question-54. The OECD stands for:

1. Organization for Environmental Control and Development
2. Organization for Economic Co-operation and Development
3. Organization for Economic Coordination and Development
4. Organization for Environmental Cooperation and Development.

Question-55. The Theory of Relative Factor Endowments is given by

1. Ohlin and Hecksher
2. David Ricardo
3. Adam Smith
4. F W Taussig

Question-56. The WTO was established to implement the final act of Uruguay Round agreement of________

1. UNO
2. MFA
3. GATT
4. TRIP's

Question-57. When two or more firms come together to create a new business entity that is legally separate and distinct from its parents it is known as

1. Licensing
2. Contract manufacturing
3. Franchising
4. Joint ventures

Question-58. Which is not an Indian Multinational Company?

1. Wipro
2. Unilever
3. Asian Paints
4. Piramal

Question-59. Which is the right sequence of stages of Internationalization

1. Domestic, International, Transnational, Multinational, Global
2. Domestic, Transnational, Global, International, Multinational
3. Domestic, International, Multinational, Global, Transnational
4. Domestic, Multinational, International, Transnational, Global

Question-60. Which of the following is not a force in the Porter Five Forces model?

1. Industry rivalry
2. Buyers
3. Suppliers
4. Complementary products

Question-61. Which of the following is not an advantage of exporting?

1. Less investment requirements
2. Easier way to enter into international markets
3. Comparatively lower risks
4. Limited presence in foreign markets

Question-62. Which one of the following is not amongst India's major export items?

1. Basmati rice
2. Textiles and garments
3. Gems and jewellery
4. Oil and petroleum products

Question-63. Which one of the following modes of entry brings the firm closer to international markets?

1. Joint venture
2. Licensing
3. Franchising
4. Contract manufacturing