International Business MCQs with Answers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Question-12. Comparative Cost Trade Theory is given by

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

Question-13. Globalization refers to:

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

Question-14. How is comparative advantage defined?

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

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. 11
2. 50
3. 15
4. 20

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

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

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

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

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

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

Question-19. Increased foreign competition tend to

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

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

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

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

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

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

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

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

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

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

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

Question-25. Nations conduct international trade because:

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

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

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

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

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

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

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

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

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

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

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

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

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

Question-32. The world bank is known as

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

Question-33. Transportation cost of trade affects:

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

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

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

Question-35. What are the four factor endowments?

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

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

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

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

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

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

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

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

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

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

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

Question-41. Which one is not an international organization

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

Question-42. Which one is not international Institution?

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

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

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

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

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

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

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

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

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

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

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

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

Question-49. NAFTA stands for

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

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

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

Question-51. Select example of Indian Multinational Company

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

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

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

Question-53. The main promoter of trade liberalization was

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

Question-54. The OECD stands for:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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