Business Economics VI MCQs (TYBCom Sem VI )

Multiple Choice Questions 14 Pages

University of Mumbai

bachlor of commerce

VDC

Contributed by

Veena Dhanush Chandran

Manan Prakashan 1
CHAPTER - 1 : INTERNATIONAL TRADE
MULTIPLE CHOICE QUESTIONS
1. International trade increases the welfare of .
(all participating countries, only exporting countries, only importing
countries, none of the above)
2. International trade increase the
of participating countries.
(output, profit, risks, none of the above)
3. According to David Ricardo, international trade is beneficial under
cost. (comparative, absolute, equal difference in cost, none of
the above)
4. David Ricardo’s Theory assumes perfect mobility of labour
.
(within the country, between the participating countries, within and
between the participating countries, none of the above)
5. Comparative cost theory is static theory because it assumes
.
(there is no qualitative and quantitative change in inputs, labour is
homogeneous within the country, there is no transport cost, none of
the above)
6. Ricardian theory measures comparative cost in terms of
.
(man days, money, input costs, all of the above)
7. Ricardian theory assumes that labour is
within the country.
(homogeneous, heterogeneous, inefficient, all of the above)
8. Ricardian theory can be extended to
. (more than two countries,
only two countries, only to developed nations, only to developing
nations)
9. Hecksher Ohlin theory on international trade can explain
trade. (inter-regional and international, only inter-regional, only
international, none of the above)
10. Commodity X is capital intensive, when in its production capital/
labour ratio is
than Commodity Y. (greater, less, equal to,
none of the above)
T.Y.B.COM. - BUSINESS ECONOMICS-VI
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2 Business Economics-VI (T.Y.B.Com.: SEM-VI)
11. Hecksher Ohlin theory cannot be applied to more than
.
(several commodities and several countries, two commodities, two
countries, few countries)
12. According to Hecksher Ohlin theory, product price depends on
.
(all of the given below, only factor intensity, only factor abundance,
factor cost)
13. According to Hecksher Ohlin theory, the international trade takes
place due to difference in
. (product price, labour efficiency,
advanced technology, all of the above)
14. In international trade
move between nations. (commodities
and not factors, factors of production, factors and commodities, none
of the above)
15. Terms of trade are expressed as a ratio of
.
(price index of exports and imports, foreign exchange receipts and
payments, FDI and portfolio investments, none of the above)
16. Terms of trade are favourable if the current index in comparison to
the base year index is
. (more, less, equal, none of the above)
17. Gross barter terms of trade takes into account
.
(trade items and unilateral payments, only trade items, only services,
none of the above)
18. Income terms of trade indicate increased capacity to
.
(import, export, investment, none of the above)
19. Single factoral terms of trade takes into account changes in
.
(efficiency of factors of production of export goods, export prices,
import prices, demand for imports)
20. Generally, the developing countries
terms of trade.
(suffer from adverse, enjoy favourable, ignore, none of the above)
21. The gain from trade is maximum if the international terms of trade
are
. (nearer to the internal terms of trade of trading partner,
nearer to the domestic terms of trade of importing country, equal to
exporting country, none of the above.)
22. An offer curve differs from
. (usual demand and supply curves,
usual demand curve, usual supply curve, none of the above)
23. International trade increases the welfare of
.
(all participating countries, only exporting country, only importing
country, only developed countries)
24. International trade results in
. (all of the given below,
innovations, reduction in costs, diversifies consumption)
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Manan Prakashan 3
25. Cultural changes due to international trade are
.
(positive and negative, only positive, only negative, none of the above)
26. The concept of gross barter terms of trade was introduced by
.
(Frank Taussig, Alfred Marshall, Francis Edgeworth, John S. Mill)
27. The concept of income terms of trade was introduced by
.
(Graeme S Dorrance, Frank W Taussig, David Ricardo, Francis
Edgeworth)
28. Utility terms of trade was introduced by
.
(Jacob Viner, Adam Smith, J. S. Mill, Frank Taussig)
29. The concept of offer curves was introduced by
.
(A. Marshall and F Edgeworth, Adam Smith and David Ricardo, John
S. Mill and John M Keynes, None of the above)
30. Terms of trade will be favourable to a country when
.
(all of the given below, its exports have inelastic demand, its imports
have elastic demand, its supply of exports is elastic)
31. The offer curve of a country is based on
. (relative prices of
two commodities, price of exports, price of imports, supply of exports)
32. A country will have unfavourable terms of trade when
.
(imports have inelastic demand, imports have elastic demand, exports
have elastic supply, none of the above)
33. When supply of exports is elastic, a country will have
terms
of trade. (favourable, unfavourable, different, none of the above)
34. The concept of reciprocal demand was introduced by
.
(J. S. Mill, J. M. Keynes, G. S. Dorrance, F.W. Taussig)
35. Reciprocal demand is expressed in terms of
.
(Offer curves, supply curves, demand curves, cost curves)
36. The classical theory of international trade was presented by
.
(David Ricardo, Hecksher-Ohlin, J. M. Keynes, Alfred Marshall)
37. Hecksher-Ohlin theory states that the relative factor prices in two
countries are determined by
. (differences in factor
endowments, labour efficiency, technological developments, none of
the above)
38. Hecksher-Ohlin theory is also known as
theory of international
trade. (modern, traditional, classical, none of the above)
40. Under
type of cost difference, international trade will not take
place. (equal, absolute, comparative, none of the above)
Ans: The first option is the correct option.
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4 Business Economics-VI (T.Y.B.Com.: SEM-VI)
CHAPTER - 2 : COMMERCIAL POLICY AND
INTERNATIONAL ECONOMIC INTEGRATION
MULTIPLE CHOICE QUESTIONS
1. Which one of the following is not an objective of commercial trade
policy ?
(a) To preserve foreign exchange reserves
(b) To determine the rate of interest
(c) To protect domestic industries from foreign competition
(d) To maintain favourable balance of payments
2. Which one of the following is an argument for free trade?
(a) Protects domestic industries
(b) Promotes self sufficiency
(c) Helps diversification of industries
(d) Promotes efficient allocation of world resources
3. Which of the following is an argument against the policy of free trade?
(a) Does not always benefit less developed countries
(b) Protects inefficient industries
(c) Causes unemployment in the export sector
(d) Harms domestic consumers
4. Protectionist policy
(a) Encourages international specialization
(b) Promotes global production
(c) Helps prevent dumping
(d) Reduces government intervention in trade
5. Tariff rate quotas are
(a) combination of tariffs and quotas
(b) based on the value of the traded commodity only
(c) based on the quantity or volume of the quantity only
(d) low tariff rate on an initial quantity of import within the quota
limit and very high tariff rate on imports above the initial amount
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Manan Prakashan 5
6. A tariff expressed as either a specific or an ad valorem rate, whichever
is higher, is known as
(a) General tariff (b) Mixed tariff
(c) Compound tariff (d) Countervailing tariff
7. Countervailing tariffs specifically aim to
(a) give preference to imports from a customs union
(b) retaliate to a tariff imposed by a trading partner
(c) neutralize the effects of subsides given to the producers in the
exporting countries
(d) counter dumping by other countries
8. A system that makes it mandatory for domestic producers to use some
proportion of domestic raw material is known as
(a) Mixing quota (b) Global quota
(c) Allocated quota (d) Import licensing
9. Which of the following is not a NTB?
(a) Voluntary export restrictions
(b) Local content requirement
(c) Administrative barriers
(d) Tariff rate quotas
10. Which one of the following NTBs prevents free movement of capital
between countries?
(a) Preferential government procurement
(b) Exchange controls
(c) Domestic subsidies
(d) Local content requirement
11. The reduction in domestic consumption due to imposition of quota
results in
(a) increase in government revenue
(b) increase in consumer’s surplus
(c) loss of social welfare
(d) increase in social welfare
12. A preferential trade area is a trade bloc where
(a) countries agree to reduce or eliminate tariff barriers on all goods
imported from other member nations
(b) countries agree to reduce or eliminate tariff barriers on selected
goods imported from other member nations
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6 Business Economics-VI (T.Y.B.Com.: SEM-VI)
(c) countries agree to have a common unified tariff against non-
members
(d) all barriers are eliminated to allow free movement of goods,
services, capital and labour
13. A free trade area is a trade bloc where
(a) countries agree to reduce or eliminate tariff barriers on all goods
imported from other member nations
(b) countries agree to reduce or eliminate tariff barriers on selected
goods imported from other member nations
(c) countries agree to have a common unified tariff against non-
members
(d) all barriers are eliminated to allow free movement of goods,
services, capital and labour
14. A customs union is a trade bloc where
(a) countries agree to reduce or eliminate tariff barriers on all goods
imported from other member nations
(b) countries agree to reduce or eliminate tariff barriers on selected
goods imported from other member nations
(c) countries agree to have a common unified tariff against non-
members
(d) all barriers are eliminated to allow free movement of goods,
services, capital and labour
15. A common or single market is a trade bloc where
(a) countries agree to reduce or eliminate tariff barriers on all goods
imported from other member nations
(b) countries agree to reduce or eliminate tariff barriers on selected
goods imported from other member nations
(c) countries agree to have a common unified tariff against non-
members
(d) all barriers are eliminated to allow free movement of goods,
services, capital and labour
16.
is one of the disadvantages of international economic
integration.
(a) cross-border investment flows
(b) employment generation
(c) increasing interdependence
(d) conflict resolution
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Manan Prakashan 7
17. The
was signed to create the EU in 1993.
(a) Treaty of Maastricht (b) Treaty of Rome
(c) Treaty of Lisbon (d) Treaty of London
18. The euro replaced the national currencies of 12 EU member nations
in the year
(a) 1997 (b) 2002
(c) 2000 (d) 1995
19. The functioning of the EU single market in governed by
(a) Treaty of Rome
(b) Treaty of Amity and Cooperation
(c) European Financial Stability Facility
(d) Treaty of the Functioning of European Union
20. The Eurozone crisis was essentially a
crisis.
(a) Immigration (b) Food
(c) Sovereign debt (d) Political
21. ASEAN was formed in
(a) 1967 (b) 1945
(c) 1999 (d) 2000
22. The
was established in 2015 to bring about economic integration
to create a single market in ASEAN.
(a) ATIGA (b) AEC
(c) AFTA (d) ABIF
23. The aim of ABIF is to establish
(a) Banking integration in ASEAN
(b) Food security in ASEAN
(c) Free labour market in ASEAN
(d) Customs union in ASEAN
Ans.: (1) - (b), (2) - (d), (3) - (a), (4) - (c), (5) - (d), (6) - (b), (7) - (c), (8) - (a),
(9) - (d), (10) - (b), (11) - (c), (12) - (b), (13) - (a), (14) - (c), (15) - (d),
(16) - (c), (17) - (a), (18) - (b), (19) - (d), (20) - (c), (21) - (a), (22) - (b),
(23) - (a)
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8 Business Economics-VI (T.Y.B.Com.: SEM-VI)
CHAPTER - 3 : BALANCE OF
PAYMENTS AND WTO
MULTIPLE CHOICE QUESTIONS
1. Unilateral transfers . (all of the below, are unrequited transfers,
are one-way transfers, include gifts/remittances)
2. Unilateral flows in the balance of payment account refer to
.
(Gifts and Grants, capital flows, visible goods flows, invisible flow of
services)
3. The full form of TRIMs is
. (Trade Related Investment
Measures, trade related insurance measures, trade related investment
methods)
4. WTO was set up on
. (1st January 1995, 1st June 1985, 31st
July, 1995, 1st January 2000)
5. GATS stands for
. (General Agreement on Trade in Services,
General Agreement on Tariff and Services, General Agreement on
Transport and Services)
6. Autonomous capital flows
other items in the balance of
payments. (are independent of, depend on, are related to, have impact
on)
7. The current account in the balance of payments
. (includes
merchandise trade and services, is a total of all the visible items of
trade, includes borrowings, includes autonomous and accommodating
flows).
8. A deficit in India’s Balance of Trade in recent times is due to
.
(all of the below, rise in price of crude oil, increase in imports, reduction
in exports)
9. Good performance on
has helped India to reduce its current
a/c balance deficit in recent times. (invisible account, trade account,
capital account)
10. There is an increase in
on India’s capital a/c in recent times.
(non-debt foreign investment flows, private transfers, private
remittances, unilateral receipts).
11. After covering deficits on current a/c, excess capital a/c receipts are
added to
. (foreign exchange reserves, IMF account, official
transfers)
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Manan Prakashan 9
12. Bank capital on India’s capital a/c includes
.
(foreign currency deposits – NRI deposits, foreign exchange reserves,
local withdrawal from NRI rupee deposits, official transfers)
13. Private transfers on India’s current account include
. (Local
withdrawal from NRI rupee deposits, foreign currency deposits,
foreign exchange reserves)
14. International trade increases the welfare of
. (all participating
countries, only exporting countries, only importing countries, none
of the above)
15. WTO agreements incorporated
proposals. (Arthur Dunkel,
Adam Smith, David Ricardo, John M. Keynes)
16.
has given mandate to negotiate multilateral rules relating to
services. (WTO, World Bank, IMF, ADB)
17. Foreign direct investment is a part of
. (Capital account, trade
account, current account, none of the above)
18. External borrowing is treated as
flow. (Accommodative,
Autonomous, invisible, none of the above)
19. Foreign exchange reserves of India include
. (All of the below,
Special Drawing Rights, Foreign Currency reserves, Reserve Tranche
of IMF)
20. The highest authority of WTO is
. (The Ministerial Conference,
The Trade Policy Review Body, The General Council, The Dispute
Settlement Body)
21. The Agreement on Agriculture does not aim at
. (Increasing
export subsidies, Improving market access, reducing domestic
subsidies, reducing domestic support)
22. Intellectual property rights include
. (All of the below,
copyrights, layout designs, trade marks)
23. The current account balance of BoP does not include
. (FDI,
services exports, unilateral transfers, non-factor services)
24.
is not a part of unilateral transfers (Short term loans, gifts,
donations, remittances by workers)
25.
is not a direct measure to correct BoP disequilibrium.
(Devaluation of exchange rate, quotas, tariffs, import substitution)
26. When BoP disequilibrium is chronic in nature and lasts for a long
time, it is a sign of
disequilibrium. (fundamental, cyclical,
structural, monetary)
27. When disequilibrium takes place due to changes in demand pattern
for exports or imports, it is a case of
disequilibrium. (structural,
cyclical, long-term, short-term)
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10 Business Economics-VI (T.Y.B.Com.: SEM-VI)
28. TRIMs agreement refers to treating foreign investment at
with
domestic investment. (par, premium, discount, inequity)
29. The effectiveness of devaluation depends on
. (All of the below,
international cooperation, elasticity of demand for merchandise goods,
elasticity of demand for services)
30. Foreign exchange reserves of India include
. (All of the below,
SDRs, Foreign Currency Assets, Gold Reserves)
31. In the past several years, India’s capital account balance was in
. (surplus, deficit, balance, none of the above)
32. Portfolio foreign investment is included in
account of BoP.
(capital, current, trade, debit)
33. Expenditure switching policies to correct BoP deficit include
of domestic currency. (devaluation, appreciation, revaluation, all of
the above)
34. Tariffs and quotas are imposed on imports to correct BoP deficit are
called as
measures. (direct, indirect, passive, all of the above)
35. The sum of the total export-import demand elasticity must be
.
(greater than one, equal to one, zero, less than one)
36. In the past several years, India’s net invisibles were in
.
(surplus, deficit, balance, none of the above)
Ans: The first option is the correct option.
Page 10

Business Economics VI MCQs (TYBCom Sem VI )

Business Economics VI MCQs (TYBCom Sem VI )

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