International business MCQ with Answers

International trade contributes and increases the world _________

A. Population
B. Inflation
C. Economy
D. Trade Barriers
View Answer
C. Economy
The ratio of trade to GDP was as high as _________ in 1913.
A. 22.1
B. 11.2
C. 26.3
D. 33.2
View Answer
A. 22.1
Free international trade maximizes world output through________.
A. Countries reducing various taxes imposed.
B. Countries specializing in production of goods they are best suited for.
C. Perfect competition between countries and other special regions
D. The diluting the international business laws & conditions between countries.
View Answer
B. Countries specializing in production of goods they are best suited for.
Domestic company limits it’s operations to ___________ political boundaries.
A. International
B. National
C. Transnational
D. Global
View Answer
B. National
Trade between two or more than two countries is known as ________.
A. Internal Business
B. External Trade
C. International Trade
D. Unilateral Trade
View Answer
C. International Trade
_____refers to the tax imposed on imports.
A. Imported Tax
B. Tariffs
C. Subsidies
D. Import Quotas
View Answer
B. Tariffs
_____ means selling the products at a price less than on going price in the market.
A. Quota
B. Tariff
C. Subsidy
D. Dumping
View Answer
D. Dumping
_______is the oldest International Trade theory.
A. Country Similarity Theory
B. Theory of Absolute Cost advantage
C. Product Life Cycle Theory
D. Mercantilism Theory
View Answer
D. Mercantilism Theory
A voluntary export restraint is the opposite form of _____.
A. Import quotas
B. International tariffs
C. Subsidies
D. Dumping
View Answer
A. Import quotas
The international trade between ___________ is like a vast game of beggar my neighbor.
A. Exporter & Importer
B. Two Countries
C. Two world wars
D. Country’s allies and enemies
View Answer
C. Two world war
Q1. Trade between two countries can be useful if cost ratios of goods are:
A. Undetermined
B. Decreasing
C. Equal
D. Different
Answer: D
Q2. The term Euro Currency market refers to
A. The international foreign exchange market
B. The market where the borrowing and lending of currencies take place outside the country of issue
C. The countries which have adopted Euro as their currency
D. The market in which Euro is exchanged for other currencies
Answer: B
Q3. Which of the following theories suggests that firms seek to penetrate new markets over time?
A. Imperfect Market Theory
B. Product cycle theory
C. Theory of Comparative Advantage
D. None of the above
Answer: B
Q4.Dumping refers to:
A. Reducing tariffs
B. Sale of goods abroad at a lower price, below their cost and price in their home market
C. Buying goods at low prices abroad and selling at higher prices locally
D. Expensive goods selling for low prices
Answer: B
Q5. International trade and domestic trade differ because of:
A. Different government policies
B. Immobility of factors
C. Trade restrictions
D. All of the above
Answer: D
Q6. The margin for a currency future should be maintained with the clearing house by
A. The seller
B. The buyer
C. Either the buyer or the seller as per the agreement between them
D. Both the buyer and the seller
Answer: D
Q7.The following statement with respect to currency option is wrong
A. Foreign currency- Rupee option is available in India
B. An American option can be executed on any day during its currency
C. Put option gives the buyer the right to sell the foreign currency
D. Call option will be used by exporters
Answer: D
 Q8. Govt. policy about exports and imports is called:
A. Commercial policy
B. Fiscal policy
C. Monetary policy
D. Finance policy
Answer: A
Q9.Which of the following is international trade?
A. Trade between countries
B. Trade between regions
C. Trade between provinces
D. Both (b) and (c)
Answer: A
Q10. Market in which currencies buy and sell and their prices settle on is called the
A. International bond market
B. International capital market
C. Foreign exchange market
D. Eurocurrency market
Answer: C

1. Trade between two countries can be useful if cost ratios of goods are:
(a) Undetermined
(b) Decreasing
(c) Equal
(d) Different

Answer: (d)

2. The term Euro Currency market refers to

(a) The international foreign exchange market
(b) The market where the borrowing and lending of currencies take place outside the country of issue
(c) The countries which have adopted Euro as their currency
(d) The market in which Euro is exchanged for other currencies

Answer: (b)

3. Which of the following theories suggests that firms seek to penetrate new markets over time?
(a) Imperfect Market Theory
(b) Product cycle theory
(c) Theory of Comparative Advantage
(d) None of the above

Answer: (b)

4. Dumping refers to:

(a) Reducing tariffs
(b) Sale of goods abroad at low a price, below their cost and price in home market
(c) Buying goods at low prices abroad and selling at higher prices locally
(d) Expensive goods selling for low prices

Answer: (b)

5. International trade and domestic trade differ because of:

(a) Different government policies
(b) Immobility of factors
 (c) Trade restrictions
(d) All of the above

Answer: (d)

6. The margin for a currency future should be maintained with the clearing house by
(a) The seller
(b) The buyer
(c) Either the buyer or the seller as per the agreement between them
(d) Both the buyer and the seller

Answer: (d)

7. The following statement with respect to currency option is wrong

(a) Foreign currency- Rupee option is available in India
(b) An American option can be executed on any day during its currency
(c) Put option gives the buyer the right to sell the foreign currency
(d) Call option will be used by exporters

Answer: (d)

8. Govt. policy about exports and imports is called:

(a) Commercial policy
(b) Fiscal policy
(c) Monetary policy
(d) Finance policy

Answer: (a)

9. Which of the following is international trade:

(a) Trade between countries
(b) Trade between regions
(c) Trade between provinces
(d) Both (b) and (c)

Answer: (a)

10. Market in which currencies buy and sell and their prices settle on is called the
(a) International bond market
(b) International capital market
(c) Foreign exchange market
(d) Eurocurrency market

Answer: (c)

1. Trade between two countries can be useful if cost ratios of goods are:
(a) Undetermined
(b) Decreasing
(c) Equal
(d) Different

Answer: (d)

2. The term Euro Currency market refers to

(a) The international foreign exchange market
(b) The market where the borrowing and lending of currencies take place outside the country of issue
 (c) The countries which have adopted Euro as their currency
(d) The market in which Euro is exchanged for other currencies

Answer: (b)

3. Which of the following theories suggests that firms seek to penetrate new markets over time?
(a) Imperfect Market Theory
(b) Product cycle theory
(c) Theory of Comparative Advantage
(d) None of the above

Answer: (b)

4. Dumping refers to:

(a) Reducing tariffs
(b) Sale of goods abroad at low a price, below their cost and price in home market
(c) Buying goods at low prices abroad and selling at higher prices locally
(d) Expensive goods selling for low prices

Answer: (b)

5. International trade and domestic trade differ because of:

(a) Different government policies
(b) Immobility of factors
(c) Trade restrictions
(d) All of the above

Answer: (d)

6. The margin for a currency future should be maintained with the clearing house by
(a) The seller
(b) The buyer
(c) Either the buyer or the seller as per the agreement between them
(d) Both the buyer and the seller

Answer: (d)

7. The following statement with respect to currency option is wrong

(a) Foreign currency- Rupee option is available in India
(b) An American option can be executed on any day during its currency
(c) Put option gives the buyer the right to sell the foreign currency
(d) Call option will be used by exporters

Answer: (d)

8. Govt. policy about exports and imports is called:

(a) Commercial policy
(b) Fiscal policy
(c) Monetary policy
(d) Finance policy

Answer: (a)

9. Which of the following is international trade:

(a) Trade between countries
(b) Trade between regions
 (c) Trade between provinces
(d) Both (b) and (c)

Answer: (a)

10. Market in which currencies buy and sell and their prices settle on is called the
(a) International bond market
(b) International capital market
(c) Foreign exchange market
(d) Eurocurrency market

Answer: (c)

11. International trade contributes and increases the world _________

1. Population
2. Inflation
3. Economy
4. Trade Barriers

Answer :-

1. Economy

12. The ratio of trade to GDP was as high as _________ in 1913.

22. 22.1
23. 11.2
24. 26.3
25. 33.2

Answer :-

22. 22.1

13. Free international trade maximizes world output through________.

1. Countries reducing various taxes imposed.

2. Countries specializing in production of goods they are best suited for.
3. Perfect competition between countries and other special regions
4. The diluting the international business laws & conditions between countries.

Answer :-

1. Countries specializing in production of goods they are best suited for.

14. Domestic company limits it’s operations to ___________ political boundaries.

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

Answer :-
1. National

15. Trade between two or more than two countries is known as ________.

1. Internal Business
2. External Trade
3. International Trade
4. Unilateral Trade

Answer :-

1. International Trade

16. _____refers to the tax imposed on imports.

1. Imported Tax
2. Tariffs
3. Subsidies
4. Import Quotas

Answer :-

1. Tariffs

17. _____ means selling the products at a price less than on going price in the market.

1. Quota
2. Tariff
3. Subsidy
4. Dumping

Answer :-

1. Dumping

18. _______is the oldest International Trade theory.

1. Country Similarity Theory

2. Theory of Absolute Cost advantage
3. Product Life Cycle Theory
4. Mercantilism Theory

Answer :-

1. Mercantilism Theory

19. A voluntary export restraint is the opposite form of _____.

1. Import quotas
2. International tariffs
3. Subsidies
4. Dumping

Answer :-
1. Import quotas

20. The international trade between ___________ is like a vast game of beggar my neighbor.

1. Exporter & Importer

2. Two Countries
3. Two world wars
4. Country’s allies and enemies

Answer :-

1. Two world wars

21. ____ is a group of countries agree to abolish all trade restrictionsand barriers.

1. Common market
2. Economic Union
3. Custom Union
4. Free Trade Area

Answer :-

1. Free Trade Area

22. EU stands for _____

1. Export Union
2. European Union
3. EXIM Union
4. Export Unit

Answer :-

1. European Union

23. The abbreviation SAARC stands for _______

1. South American Association for Regional Cooperation

2. South African Association for Regional Cooperation
3. South ASEAN Association for Regional Cooperation
4. South Asian Association for Regional Cooperation

Answer :-

1. South Asian Association for Regional Cooperation

24. The full form of WTO is __________

1. World Tariff Organization

2. World Trade Organization
3. Western Trade Organization
4. World Transport Organization

Answer :-
1. World Trade Organization

25. ________was replaced by WTO on January 1, 1995.

1. NAFTA
2. IMF
3. IRDB
4. GATT

Answer :-

1. GATT

26. In International Trade, Full form of NAFTA is ___________.

1. National American Free Trade Agreement

2. North Asian Free Trade Agreement
3. New Anti-Tariff Free Trade Agreement
4. North American Free Trade Agreement

Answer :-

1. North American Free Trade Agreement

27. AFTA is ___________.

1. ASEAN Free Trade Area

2. American Free Trade Area
3. Asian Free Trade Area
4. Agreement for Free Trade Area

Answer :-

1. ASEAN Free Trade Area

28. ASEAN stands for ___________.

1. The Association of Southeast American Nations

2. The Association of Southeast Asian Nations
3. The Agreement of Southeast American Nations
4. The Agreement of Southeast Asian Nations

Answer :-

1. The Association of Southeast Asian Nations

29. __________was established by a multilateral treaty of 23 countries in 1947.

1. WTO
2. UN
3. GATT
4. NAFTA

Answer :-
1. GATT (The General Agreement on Tariffs and Trade)

30. In International Trade, IMF stands for ___________.

1. International Monetary Fund

2. International Money Fund
3. International Market Fund
4. International Monetary Firm

Answer :-

1. International Monetary Fund

QUESTION ANSWER

Transportation cost of trade

affects:

a) pattern of trade
d) all of the above
b) boundaries between tradable and
non-tradable goods
c) Global supply chains
d) all of the above

Underlying the application of the

monopolistic competition model to
trade is the idea that trade:
a) increases market size
b) allows companies to charge higher a) increases market size
price
c) increases consumer choices
d) decreases the number of firms in
an industry

A no-trade world will have which of

the following characteristics:

a) Countries will have same relative

endowments of production factors

b) Consumers across countries will d) all above

have identical and homogenous tastes

c) There will be no distortions or

externalities

d) all of the above

Which of the following trade

policies limits specified quantity of a) Quota
goods to be imported at one tariff
rate.

a) Quota

b) Import tariff
c) Specific tariff
d) All of the above

In the 2-factor, 2 good Heckscher-

Ohlin model, the two countries
differ in
a) Military capabilities c) relative availabilites of factors of
b) labour productivities production
c) relative availabilities of factors of
production
d) tastes

Since 1980s which of the following

changes has happened in the world
trade?
a) Share of "north-north" trade has
decreased in total merchandise
exports
d) all of the above
b) Share of "south--south" trade has
increased in total merchandise eports
c) share of agriculture produce has
decreased in total merchandise
exports
d) all of the above

According to Ricardo, a country

will have a comparative advantage
in:

a) Industries in which there are neither

imports nor exports c) industries that sell to domestic
and foreign buyers

b) import competiting industries

c) Industries that sell to domestic and
foreign buyers
d) industries that sell to only foreign
buyers

Nations conduct international trade

because:
a) Some nations prefer to produce
one thing while others produce other
b) Resources are not equally
things.
distributed among all trading
b) Resources are not equally
nations.
distributed among all trading nations.
c) Trade enhances opportunities to
accumulate profits.
d) Interest rates are not identical in all
 trading nations

Which of the following is a

determinant of trade?
a) Tastes
b) Per capita income
d) All of the above
c) Technological change

d) All of the above

International Trade is most likely to

generate short-term unemployment
in:
a) Industries in which there are neither
imports nor exports
b) Import-competing industries
b) Import-competing industries
c) Industries that sell to domestic and
foreign buyers.
d) Industries that sell to only foreign
buyers

According to the theory of

comparative advantage, which of
the following is NOT a reason why
countries trade?

a) Costs are higher in one country

than in another. d) Exports give a country a political
b) Prices are lower in one country advantage over other countries that
than in another. export less.
c) The productivity of labour differs
across countries and industries.

d) Exports give a country a political

advantage over other countries that
export less.

The reason why international trade

has strong effects on the
distribution of income is because:
a) Resources cannot move
immediately or without cost from one
industry to another. c) both a & b

b) Industries differ in the factors of

production they demand
c) both a & b

d) Trade has no effect on distribution

of income.

New trade theory assumes the

following:
a) Increasing returns to scale
b) Imperfect competition
d) all of the above
c) Product differentiation

d) all of th above

A vertical foreign direct investment

(FDI) is:
a) breaking up the production chain
and parts being transferred to the
affiliated location c) both a & b
b) Mainly driven by production cost
differences between countries.
c) both a and b
d. none of the above

Which of the following is not a

benefit of international trade?
a) High wage levels for all domestic
workers
a) High wage levels for all domestic
workers
b) Lower domestic prices
c) Development of more efficient
methods and new products.
d) A greater range of consumption
choices.

Bangladish is relatively abundant in a) Absolut advantage in production of

labour, while Canada is relatively shirts and computers.
abundant in capital. In both b) Absolute advantage in prodcution
countries the production of shirts of computers
is relatively more labour intensive c) Comparative advantage in
than the production of computers. production of shirts.
According to the factor endowment d) Comparative advantage in
theory, Bangladish will have a(n) production of computers.

Which of the following policies

permits a specifid quantity of
goods to be improted at one tariff
rate and applies a higher tariff rate
a) Tariff quota
to imports avobe this quantity?

a) Tariff quota
 b) Import tariff
c) Specific tariff
d) All of the above

a) Voluntary export quotas

A country's workers union
attempted to win the approval of
b) export subsidies
legislation that would moderate the
practice of foreign sourcing on the
part of auto manufacturers. Which
c) tariff quotas
of the following best represents
this legislation.
d) local content requirement

Which of the following explains

intra-industry trade.

a) Wrong industrial classification

d) All of the above

b) Product differantiation

c) Economics of scale

d) All of the above

Free traders maintain that an open

economy is advantageous in that it
provides all of the following except:

a) Increased competition for world

producers

d) Relatively high wage levels for all

b) A wider selection of products for
domestic workers.
consumers

c) The utilization of the most efficient

production methods.

d) Relatively high wage levels for all

domestic workers.

The fact that Germany both

imports and exports cars is an a) Intraindustry trade
example of:
a) Intraindustry trade

b) Interindustry trade

c) Perfect competition.

d) Imperfect competition.

Who benefits from tariff protection?

a) Domestic consumers on the good

produced

b) Domestic producers of the good

b) Domestic producers of the good
produced
produced?

c) Foreign producers of the good

produced

d) Foreign consumers of the good

produced.

A closed economy is one in which:

a) Imports exactly equal exports, so

that trade is balanced.

b) Domestic firms invest in industries

c) The home economy is islated from
overseas.
foreign trade.

c) The home economy is isolated from

foreign trade

d) Saving exactly equals investment at

full employment.

Which of the following statements

would a mercantilist NOT agree
with?

a) Imports are desirable.

a) Imports are desirable

b) Trade is a zero-sum activity.

c) The purpose of trade is to amass
revenues from exports.
d) Policies should promote exports
and discourage imports.

Which of the following is one of the

conclusions of New Trade Theory?

a) Countries as a while must gain from

trade.

b) A country can only hurt itself by

c) Consumers gain from the
using government policies to promote
increased variety of goods that trade
exports.
makes available

c) Consumers gain from the increased

variety of goods that trade makes
available

d) A country may export a good or

import it, but not both.

Total value of annual global trade - in

recent years - is most likely to be:

a) € 40 billion

b) 40 trillion
b) € 40 trillion

c) € 4 billion

d) € 4 trillion

According to the Ricardo's

principle, specialisation and trade
increase a nation's total output
since:

a) Resources are directed to their

highest productivity a) Resources are directed to their
highest productivity

b) The output of the nation's trading

partner declines

c) The nation can produce outside of

its production possibilities curve.
 d) The problem of unemployment is
eliminated.

What determines the pattern of

specialisation and trade in
industries with external economies
of scale?
a) Product differentiation

c) historical competition
b) Monopolistic competition

c) Historical contingency

d) None of the above

The reason why a cluster of firms

may be more efficient than in
individual firm is because a cluster
enables:
a) Specialised suppliers

d) all of the above

b) Imperfect competition

c) Product differentiation

d) All of the above

A horizontal foreign direct

investment (FDI) is

a) Starting a similar production

process (by the parent firm) elswhere
in the world

c) both a & b
b) Locating a production near a firm's
large customer bases.

c) Both a and b.

d) None of the above.

David Ricardo's trading principle

emphasis the:
c) Role of comparative costs
a) Demand side of the market

b) supply side of the market

c) role of comparative costs

d) role of absolute costs

Under Heckscher-Ohlin Model,

international trade can lead to
increases in:
a) Consumer welfare only if output of
both products is increased

b) Output of both products and

consumer welfare in both countries
b) Output of both products and
consumer welfare in both countries
c) Total production of both products,
but not consumer welfare in both
countries

d) Consumer welfare in both

countries, but not toal production of
both products.

A main advantage in specialisation

results from:
a) Economies of large-scale
production

b) The specializing country behaving

as monopoly a) Economies of large-scale
production

c) Smaller production runs resulting in

lower unit costs.

d) High wages paied to foreign

workers.

A country’s workers union attempted

to win the approval of legislation that
wouldmoderate the practice of foreign
sourcing on the part of auto
manufacturers. Which ofthe following
best represents this legislation?

a) Voluntary export quotas

b) Export subsidies

c) Tariff quotas

d) Local content requirement