McqMate
Chapters
1. |
What are the four factor endowments? |
A. | national resources, labor, physical capital and human capital |
B. | types of technology |
C. | material inputs used up in the process of production |
D. | international differences in climate |
Answer» A. national resources, labor, physical capital and human capital |
2. |
The Heckscher- Ohlin model is principally focused on what aspect of economics? |
A. | international trade |
B. | supply and demand |
C. | normative economics |
D. | production possibility frontier |
Answer» A. international trade |
3. |
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 have identical and homogenous tastes |
C. | there will be no distortions or externalities |
D. | all of the above |
Answer» D. all of the above |
4. |
Transportation cost of trade affects: |
A. | pattern of trade |
B. | boundaries between tradable and non-tradable goods |
C. | global supply chains |
D. | all of the above |
Answer» D. all of the above |
5. |
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 |
C. | industries that sell to domestic and foreign buyers. |
D. | industries that sell to only foreign buyers |
Answer» B. import-competing industries |
6. |
What was the first economic theory of international trade to be developed? |
A. | the theory of mercantilism |
B. | the theory of comparative advantage |
C. | the theory of absolute advantage |
D. | the heckscher-ohlin theory |
Answer» A. the theory of mercantilism |
7. |
According to Adam Smith, the trade between countries should happen _____. |
A. | naturally according to the market forces |
B. | under government regulation |
C. | using factors that are available |
D. | only when a country has an absolute advantage |
Answer» D. only when a country has an absolute advantage |
8. |
If a nation has an open economy it means that the nation: |
A. | allows private ownership of capital. |
B. | has flexible exchange rates |
C. | has fixed exchange rates |
D. | conducts trade with other countries |
Answer» D. conducts trade with other countries |
9. |
International trade forces domestic firms to become more competitive in terms of |
A. | the introduction of new products |
B. | product design and quality |
C. | product price |
D. | all of the above |
Answer» D. all of the above |
10. |
The movement to free international trade is most likely to generate short-term unemployment in which industries |
A. | industries in which there are neither imports nor exports |
B. | import-competing industries. |
C. | industries that sell to domestic and foreign buyers |
D. | industries that sell to only foreign buyers |
Answer» B. import-competing industries. |
11. |
According to the principle of comparative advantage: |
A. | south korea should export steel |
B. | south korea should export steel and dvds |
C. | japan should export steel |
D. | japan should export steel and dvds |
Answer» A. south korea should export steel |
12. |
Country A has an absolute advantage in |
A. | product x |
B. | product y |
C. | neither x nor y |
D. | both x and y |
Answer» B. product y |
13. |
Globalization refers to: |
A. | lower incomes worldwide |
B. | less foreign trade and investment |
C. | global warming and their effects |
D. | a more integrated and interdependent world |
Answer» D. a more integrated and interdependent world |
14. |
Comparative Cost Trade Theory is given by |
A. | adam smith |
B. | david ricardo |
C. | gottfried haberle |
D. | heckscher ohlin |
Answer» 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. |
A. | bill of lading |
B. | letter of credit |
C. | open account |
D. | drafts |
Answer» B. letter of credit |
16. |
Key controllable factors in global marketing are: |
A. | government policy and legislation |
B. | social and technical changes |
C. | marketing activities and plans |
D. | all of the above. |
Answer» C. marketing activities and plans |
17. |
The first phase of globalization started around 1870 and ended with ….. |
A. | world war i |
B. | world war ii |
C. | the establishment of gatt |
D. | in 1913 when gdp was high |
Answer» 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. |
A. | gold theory |
B. | ricardo theory |
C. | mercantilism |
D. | hecksher theory |
Answer» C. mercantilism |
19. |
The Theory of Absolute Cost Advantage is given by |
A. | david ricardo |
B. | adam smith |
C. | f w taylor |
D. | ohlin and heckscher |
Answer» B. adam smith |
20. |
The Theory of Relative Factor Endowments is given by |
A. | david ricardo |
B. | adam smith |
C. | c. f w taussig |
D. | ohlin and hecksher |
Answer» D. ohlin and hecksher |
21. |
The theory of comparative cost advantage is given by |
A. | david ricardo |
B. | adam smith |
C. | f w taussig |
D. | ohlin and heckscher |
Answer» A. david ricardo |
22. |
A multinational is a firm that controls and manages production facilities in |
A. | both developed and developing countries |
B. | at least two countries |
C. | one country but relies on multiple markets for the consumption of goods it produces |
D. | at least two developed countries and one developing country |
Answer» B. at least two countries |
23. |
Locational advantages are based on which combination of the following specific country characteristics |
A. | a large reserve of natural resources, a large local market and efficiency opportunities |
B. | a small reserve of natural resources, a large local market and efficiency opportunities |
C. | a small reserve of natural resources, a small local market and efficiency opportunities |
D. | a large reserve of natural resources, a small local market and efficiency opportunities |
Answer» A. a large reserve of natural resources, a large local market and efficiency opportunities |
24. |
Horizontal integration occurs when |
A. | firm creates singular country production facilities, each of which produces different good or goods |
B. | firm creates multiple production facilities, each of which produces the same good or goods. |
C. | firm creates multiple production facilities, each of which produces different good or goods |
D. | firm creates singular country facilities, each of which produces the same good or goods |
Answer» 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? |
A. | a u.s. bank buys bonds issued by a taiwan computer manufacturer. |
B. | a u.s. car manufacturer enters into a contract with a taiwan firm to make and sell it spark plugs. |
C. | microsoft hires a taiwanese computer programmer to debug some software for it. |
D. | the state of california rents space in taipei for one of its employees to use promoting tourism in |
Answer» 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? |
A. | build a manufacturing subsidiary there and employ czech workers. |
B. | build a plant in the czech republic and send all german workers to operate it. |
C. | license a czech firm to produce its products under its own label. |
D. | contract for a czech firm to do some of the processing for it. |
Answer» 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? |
A. | world trade organization |
B. | the sarbanes-oxley act |
C. | multilateral development banks |
D. | the organization for economic cooperation and development |
Answer» A. world trade organization |
28. |
. Removing barriers or restrictions set by the government is called: |
A. | liberalisation |
B. | investment |
C. | favorable trade |
D. | free trade |
Answer» A. liberalisation |
29. |
Which is the right sequence of stages of Internationalization |
A. | domestic, transnational, global, international, multinational |
B. | domestic, international, multinational, global, transnational |
C. | domestic, multinational, international, transnational, global |
D. | domestic, international, transnational, multinational, global |
Answer» B. domestic, international, multinational, global, transnational |
30. |
Subsidiaries consider the regional environment for policy / Strategy formulation is known as |
A. | polycentric approach |
B. | regionocentric approach |
C. | ethnocentric approach |
D. | geocentric approach |
Answer» B. regionocentric approach |
31. |
. Which is not an Indian Multinational Company? |
A. | unilever |
B. | asian paints |
C. | piramal |
D. | wipro |
Answer» A. unilever |
32. |
Select example of Indian Multinational Company |
A. | hindustan unilever |
B. | videocon |
C. | cargill |
D. | tesco |
Answer» 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. |
A. | global |
B. | international |
C. | transnational |
D. | none of the above |
Answer» A. global |
34. |
The —————-company produces, markets, invests and operates across the world |
A. | global |
B. | international |
C. | transnational |
D. | multinational |
Answer» C. transnational |
35. |
Business across several countries with some decentralization of management decision making to subsidiaries is |
A. | global business. |
B. | multinational business. |
C. | transnational business. |
D. | multi-regional business. |
Answer» B. multinational business. |
36. |
Immobility of labor among nations is |
A. | absolute. |
B. | relatively of a higher degree than among regions in the same country. |
C. | relatively easier than movement within the country. |
D. | of the same degree as within the country. |
Answer» 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 |
A. | different currencies |
B. | product quality |
C. | product mobility |
D. | trade policies |
Answer» B. product quality |
38. |
By entering into international business, a firm expects improvement in |
A. | marketing. |
B. | all spheres of marketing, operation and finance simultaneously. |
C. | any or all spheres of marketing, operation and finance. |
D. | finance only |
Answer» C. any or all spheres of marketing, operation and finance. |
39. |
Ultimately ………………was replaced by the …………….on 1st Jan 1995 |
A. | gats, wto |
B. | wto, gatt |
C. | gatt, wto |
D. | imf, gatt |
Answer» C. gatt, wto |
40. |
_______ is the first step in the internationalization process. |
A. | license |
B. | foreign investment |
C. | sales |
D. | export |
Answer» A. license |
41. |
In the foreign exchange market, the ________ of one country is traded for the ________ of another country. |
A. | currency; currency |
B. | currency; financial instruments |
C. | currency; goods |
D. | goods; goods |
Answer» A. currency; currency |
42. |
By definition, currency appreciation occurs when |
A. | the value of all currencies falls relative to gold. |
B. | the value of all currencies rises relative to gold. |
C. | the value of one currency rises relative to another currency. |
D. | the value of one currency falls relative to another currency |
Answer» C. the value of one currency rises relative to another currency. |
43. |
Hedging is used by companies to: |
A. | decrease the variability of tax paid |
B. | decrease the spread between spot and forward market quotes |
C. | increase the variability of expected cash flows |
D. | decrease the variability of expected cash flows |
Answer» D. decrease the variability of expected cash flows |
44. |
Exchange rates |
A. | are always fixed |
B. | fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied |
C. | fluctuate to equate imports and exports |
D. | fluctuate to equate rates of interest in various countries |
Answer» 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, |
A. | it will take fewer dollars to purchase a pound |
B. | it will take more dollars to purchase a pound |
C. | it is called a weakening of the dollar |
D. | both a & c |
Answer» A. it will take fewer dollars to purchase a pound |
46. |
A floating exchange rate |
A. | is determined by the national governments involved |
B. | remains extremely stable over long periods of time |
C. | is determined by the actions of central banks |
D. | is allowed to vary according to market forces |
Answer» 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 |
A. | liquid currency |
B. | foreign currency |
C. | local currency |
D. | base currency |
Answer» D. base currency |
48. |
An economist will define the exchange rate between two currencies as the: |
A. | amount of one currency that must be paid in order to obtain one unit of another currency |
B. | difference between total exports and total imports within a country |
C. | price at which the sales and purchases of foreign goods takes place |
D. | ratio of import prices to export prices for a particular country |
Answer» 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 |
A. | depreciate. |
B. | appreciate. |
C. | show no specific tendency. |
D. | depreciate against currencies of the countries with positive balance of payment and appreciate against |
Answer» A. depreciate. |
50. |
The demand for domestic currency in the foreign exchange market is indicated by the following transactions in balance of payment |
A. | export of goods and services |
B. | import of goods and services. |
C. | export of goods and services and capital inflows. |
D. | import of goods and services and capital outflows. |
Answer» 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 |
A. | spot rate |
B. | bid rate |
C. | ask price |
D. | forward rate |
Answer» B. bid rate |
52. |
The __________ is especially well suited to offer hedging protection against transactions risk exposure. |
A. | forward market |
B. | spot market |
C. | transactions market |
D. | inflation-rate market |
Answer» A. forward market |
53. |
Difference between buying and selling rates in an exchange rate is known as |
A. | strike price |
B. | spread |
C. | swap points |
D. | spot rate |
Answer» 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 |
A. | golden standard |
B. | flexible exchange rate |
C. | fixed exchange rate |
D. | cross exchange rate |
Answer» D. cross exchange rate |
55. |
The swap arrangement where principal amounts are not exchanged, but periodical payments will be |
A. | currency swap |
B. | cross currency interest swap |
C. | interest rate swap. |
D. | non-financial swap. |
Answer» C. interest rate swap. |
56. |
What is FEMA? |
A. | first exchange management act |
B. | foreign exchequer management act |
C. | foreign exchange management act |
D. | foreign evaluation management act |
Answer» 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. |
A. | spot transactions |
B. | outright forward transactions |
C. | fx swaps |
D. | reverse transactions |
Answer» A. spot transactions |
58. |
Outright forward transactions involve the exchange of currency beyond three days at a fixed exchange rate, known as the: |
A. | spot rate. |
B. | forward rate |
C. | fx swap rate. |
D. | reverse transaction rate |
Answer» B. forward rate |
59. |
The biggest market for foreign exchange is which of the following? |
A. | new york |
B. | tokyo |
C. | london |
D. | china |
Answer» C. london |
60. |
The ______________ is the price at which the trader is willing to buy foreign currency. |
A. | offer |
B. | bid |
C. | spread |
D. | cross rate |
Answer» B. bid |
61. |
Which of the following is the price at which the trader is willing to sell foreign currency? |
A. | bid |
B. | spread |
C. | offer |
D. | cross rate |
Answer» C. offer |
62. |
.………is only a legal agreement and it is not an institution, but ….. is a permanent institution. |
A. | gatt, wto |
B. | wto, gatt |
C. | wto, imf |
D. | imf, gatt |
Answer» A. gatt, wto |
63. |
The WTO was established to implement the final act of Uruguay Round agreement of …… |
A. | mfa |
B. | gatt |
C. | trip’s |
D. | uno |
Answer» B. gatt |
64. |
WTO stands for |
A. | world technology association |
B. | world time organization |
C. | world trade organization |
D. | world tourism organization |
Answer» 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? |
A. | wto |
B. | eu |
C. | world bank |
D. | bank for international settlements |
Answer» D. bank for international settlements |
66. |
Which of the following are institutional banks that provide financial support and professional advice for developing countries? |
A. | multilateral development banks |
B. | central banks |
C. | investment banks |
D. | barclays bank |
Answer» A. multilateral development banks |
67. |
In the foreign exchange market, the ________ of one country is traded for the ________ of another country. |
A. | currency; currency |
B. | currency; financial instruments |
C. | currency; goods |
D. | goods; goods |
Answer» B. currency; financial instruments |
68. |
Which of the following examples definitely illustrates a depreciation of the U.S. dollar? |
A. | the dollar exchanges for 1 pound and then exchanges for 1.2 pounds. |
B. | the dollar exchanges for 250 yen and then exchanges for 275 francs. |
C. | the dollar exchanges for 100 francs and then exchanges for 120 yen. |
D. | the dollar exchanges for 120 francs and then exchanges for 100 francs |
Answer» 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 |
A. | efficient |
B. | perfect |
C. | imperfect |
D. | both a & b |
Answer» C. imperfect |
70. |
The exchange rate is the |
A. | total yearly amount of money changed from one country’s currency to another country’s currency |
B. | total monetary value of exports minus imports |
C. | amount of country’s currency which can exchanged for one ounce of gold |
D. | price of one country’s currency in terms of another country’s currency |
Answer» D. price of one country’s currency in terms of another country’s currency |
71. |
A speculator in foreign exchange is a person who |
A. | buys foreign currency, hoping to profit by selling it a a higher exchange rate at some later date |
B. | earns illegal profit by manipulation foreign exchange |
C. | causes differences in exchange rates in different geographic markets |
D. | none of the above |
Answer» A. buys foreign currency, hoping to profit by selling it a a higher exchange rate at some later date |
72. |
Under a gold standard, |
A. | a nation’s currency can be traded for gold at a fixed rate |
B. | a nation’s central bank or monetary authority has absolute control over its money supply |
C. | new discoveries of gold have no effect on money supply or prices |
D. | a & b |
Answer» A. a nation’s currency can be traded for gold at a fixed rate |
73. |
The Bretton Woods accord |
A. | of 1879 created the gold standard as the basis of international finance |
B. | of 1914 formulated a new international monetary system after the collapse of the gold standard |
C. | of 1944 formulated a new international monetary system after the collapse of the gold standard |
D. | none of the above |
Answer» 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 |
A. | gold standard |
B. | fixed exchange rate system |
C. | floating exchange rate system |
D. | managed float exchange rate system |
Answer» D. managed float exchange rate system |
75. |
Ask quote is for |
A. | seller |
B. | buyer |
C. | hedger |
D. | speculator |
Answer» A. seller |
76. |
A simultaneous purchase and sale of foreign exchange for two different dates is called |
A. | currency devalues |
B. | currency swap |
C. | currency valuation |
D. | currency exchange |
Answer» B. currency swap |
77. |
The basic objective of export Promotion Council is to promote and develop the Exports of the |
A. | particular products of country |
B. | only attractive projects of the country |
C. | only services industry products of the country. |
D. | overall exports of the country. |
Answer» D. overall exports of the country. |
78. |
The main promoter of trade liberalization was |
A. | gatt |
B. | nafta |
C. | cepta |
D. | cisa |
Answer» A. gatt |
79. |
_______________ is an important reason for economic integration. |
A. | geographic proximity |
B. | democracy |
C. | totalitarianism |
D. | common law practice |
Answer» 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. |
A. | customs union |
B. | free trade area |
C. | common market |
D. | complete economic integration |
Answer» A. customs union |
81. |
A _______________ focuses on eliminating internal tariffs with member countries levying a common
|
A. | free trade area |
B. | common market |
C. | customs union |
D. | complete economic integration |
Answer» B. common market |
82. |
_______________ occurs when production shifts to more efficient producers for reasons of
|
A. | trade diversion |
B. | divestment |
C. | trade creation |
D. | retrenchment |
Answer» 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? |
A. | cefta (the central european free trade agreement) |
B. | nafta (the north american free trade agreement) |
C. | asean (association of south east asian nations) |
D. | eu (the european union) |
Answer» B. nafta (the north american free trade agreement) |
84. |
_______________ occurs when trade shifts to countries in the group at the expense of trade with
|
A. | trade creation |
B. | divestment |
C. | retrenchment |
D. | trade diversion |
Answer» D. trade diversion |
85. |
NAFTA calls for all of the following EXCEPT: |
A. | the harmonization of trade rules |
B. | the liberalization of restrictions on services |
C. | the implementation of a common currency |
D. | the liberalization of restrictions on foreign investment |
Answer» C. the implementation of a common currency |
86. |
NAFTA is a good example of: |
A. | trade erosion. |
B. | divestment. |
C. | retrenchment. |
D. | trade diversion. |
Answer» D. trade diversion. |
87. |
Where is the headquarters of the EU? |
A. | belgium |
B. | netherlands |
C. | luxembourg |
D. | greece |
Answer» A. belgium |
88. |
Apart from India, Pakistan and Bangladesh who are the other member countries of SAARC? |
A. | nepal, bhutan, thailand and singapore |
B. | nepal, bhutan, malaysia and maldives |
C. | nepal, bhutan, maldives, sri lanka and afghanistan |
D. | none of the above |
Answer» C. nepal, bhutan, maldives, sri lanka and afghanistan |
89. |
Which of the following is not the main purpose for formation of SAARC |
A. | to combat terrorism |
B. | to promote the welfare of the people of south asia |
C. | to form mutual defense against foreign aggression |
D. | none of the above |
Answer» C. to form mutual defense against foreign aggression |
90. |
SAPTA is a trade agreement by _________________ |
A. | asean nations |
B. | apec nations |
C. | saarc nations |
D. | eu nations |
Answer» C. saarc nations |
91. |
What is the full form of ASEAN? |
A. | association of south east asian nations |
B. | administration of south east asian nations |
C. | administration of southern eastern asian nations |
D. | organisation of south east asian nations |
Answer» A. association of south east asian nations |
92. |
The European Union is a free trade association that is based on a(n) |
A. | economic and monetary union. |
B. | economic union. |
C. | monetary union. |
D. | a commonly agreed upon list of lowered tariffs. |
Answer» A. economic and monetary union. |
93. |
Which one of the following has a single currency managed by a common central bank? |
A. | asean |
B. | european union |
C. | world trade organization |
D. | the organization for economic cooperation and development |
Answer» B. european union |
94. |
Which one of the following is renowned for its high-quality databases on economic and social data? |
A. | wto |
B. | eu |
C. | oecd |
D. | world bank |
Answer» C. oecd |
95. |
The main reason behind MNCs investments are |
A. | to benefit foreign countries |
B. | to provide financial support to the country’s government |
C. | for the welfare of underprivileged people. |
D. | to increase the assets and earn profits. |
Answer» D. to increase the assets and earn profits. |
96. |
Which institute supports investments and foreign trade in India? |
A. | international monetary fund (imf) |
B. | world trade organisation (wto) |
C. | world bank |
D. | international labour organisation (ilo) |
Answer» B. world trade organisation (wto) |
97. |
Within an international context, what are 'economies of scope' synonymous with? |
A. | decreased cost per unit of output. |
B. | buying components in bulk. |
C. | reusing a resource from one business/country in additional businesses/countries. |
D. | all of the above. |
Answer» D. all of the above. |
98. |
According to the concept of the value chain, of an international firm is profitable if: |
A. | the value it commands exceeds the costs involved in creating the product |
B. | the value it commands is lower than the costs involved in creating the product |
C. | it operates in global industries |
D. | the value it commands equals the costs involved in creating the product. |
Answer» 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, |
A. | it must use dollars to pay mexican farmers. |
B. | it may use any currency it chooses. |
C. | it must use pesos to pay mexican farmers. |
D. | the transaction shows up in the u.s. capital account. |
Answer» C. it must use pesos to pay mexican farmers. |
100. |
A country records its international finance accounts in it’s |
A. | balance of payments accounts. |
B. | import/export log accounts. |
C. | trade payments accounts. |
D. | net exports payments account. |
Answer» A. balance of payments accounts. |
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