Modern education society’s

Neville Wadia Institute of Management Studies & Research, Pune 01

MCQ Questions of International Business Environment (307)

Unit I

Q.1 Nations conduct international trade because:

a) Some nations prefer to produce one thing while others produce other things.

b) Resources are not equally distributed among all trading nations.

c) Trade enhances opportunities to accumulate profits.

d) Interest rates are not identical in all trading nations

Ans - b

Q.2 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

Ans- b

Q.3 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

Ans –d

Q.4 Increased foreign competition tend to

a) Intensify inflationary pressure at home

b) Induce falling output per worker-hour for domestic workers

c) Place constraints on the wages of domestic workers

d) Increase profits of domestic import-competing industries

Ans- c

Q.5 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

Ans- b

Q.6 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

Ans –d

Q.7 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

Ans- d

Q.8 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

ans-d
Q.9 Mercantilists believed that a country could increase the amount of wealth it had by
.

a) Promoting exports and discouraging imports

b) Discouraging exports and promoting imports

c) Controlling imports and exports

d) Increasing both imports and exports

ans- a

Q.10 Investment in Plant & machinery is termed as-

a) FDI
b) FII
c) Portfolio Investment
d) Capital Investment

Ans- D

Q.11 The traditional mode of entering into international business is-

a) Licensing
b) Exporting
c) Joint venture
d) Subsidiary

Ans- b

Q.12 Which type of following stage of internationalization has Decentralized

decision making?

a) Subsidiary
b) Multinational Corporation
c) Transnational corporation
d) Domestic Company

Ans – c

Q.13 Agreement between two parties where in one gives rights to use their intangible
property to another entity is called as-

a) Direct Exporting
b) Turnkey project
c) Strategic alliance
d) Licensing

Ans- d
Q. 14 Domestic company is stage of internationalization process.

3rd

2nd

1st

None

Ans- c

Q.15 Only manufacturing and exporting as per the requirement of importer is called-

a) Direct Export
b) Sales
c) Import
d) Indirect Export

Ans- d

Q.16 Complex projects involving creation of an asset as per the requirement of the client
is called .

a) Joint venture
b) Strategic alliance
c) Turnkey Project
d) Subsidiary

Ans- c

Q.17 Rapid integration or interconnection between countries is known as:

a) Globalisation
b) Liberalisation
c) Socialisation
d) Privatisation

Ans- a

Q.18 Globalisation has improved in the living structure of

a) All the people

b) Workers in Developing Countries
c) People in developed Countries
 d) None of the above

Ans- c

Q.19 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 assets & earn profits

Ans -d

Q. 20 Which institute supports investments and foreign trade in India?

a) IMF
b) WTO
c) World Bank
d) International labour Organisation ( ILO)
Ans - b

Q.21Which of the following is not a feature of a Multi-National Company?

a) It owns/ control production in more than one nation

b) It set up factories where it is close to the market
c) It organises production in complex ways.
d) It employs labour only from its own country

Ans - d

Q. 22 An MNC is a company that owns or controls production in

a) One country
b) More than one country
c) Only developing countries
d) Only developed countries

Ans - b

Q.23 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
 Unit II

Q.24 Which of the following business environment are known and controllable?

a) Domestic business Environment

b) Foreign business Environment
c) International business Environment
d) None

Ans – a

Q.25 Forces that impacts business environment due to change in government is type of-

a) Legal
b) Cultural
c) Social
d) Political

Ans- d

Q. 26 Which of the following is not cultural factor?

a) Language
b) Income
c) Beliefs
d) Customs

Ans- b

Q. 27 Rise in prices due imbalance between demand and supply is called as-

a) GDP
b) Inflation
c) Deflation
d) None of the above

Ans-b

Q.28 Culture spreads from one place to another and such transmission is called as .

a) difference.
b) reputation.
c) adoption.
d) heritage.

ANSWER: A

Q 29. What are the elements of business ethics?

a) Values rights and duties.

 b) attitudes pressure and environment.
c) value environment and attitude.
d) Responsibilities.

ANSWER: A

Q.30 India follows the political system-

a) Authoritarian
b) Parliamentary
c) Absolutist system
d) Military dictatorship

Ans – b

Q.31 The is being driven by the demand and supply of products and services.

a) Market economy
b) Capitalist economy
c) Both a & B
d) Socialist Economy
Ans -c

Q.32 India is the best example of-

a) Market Economy
b) Capitalist economy
c) Mixed Economy
d) Socialist Economy
Ans- c

Q. 33Which of the following is not only a part of ethics but statutory compliance?

a) Preserving Natural resources

b) Development of Roads
c) Fair Product & Prices
d) Disclosure of Financial Statement

Ans –d

Q.34 Which of the following attitude is result of religion?

a) Attitude towards work

b) Purchasing Behaviour
c) None of the both
d) Both A & B

Ans- D
Q. 35 Commitment, competence and consistency are three distinct characteristics that
result in

a. Culture building

b. Values

c. Organizational socialization

d. Attitudes

Ans- a

Q.36 The practices of a company for which it is accountable in relation to other parties
is called

a. Social responsibility

b. Code of Ethics

c. Values

d. Culture

Ans: (a)

Q. 37 National culture is based on

a. Language

b. The territory of the state

c. The sense of belonging of a people

d. The nation-state.

Ans: (c)

Q. 38 Corporate governance is a form of

a. External regulation

b. Self regulation

c. Government control

d. Charitable action

Ans: (b)

Q. 39 CSR & corporate governance represent a---------between business and society.

a. Social climate
b. Special contract

c. Special climate

d. Social contract

Ans: (d)

Q.40 Corporate governance is concerned with the formation of.....................term objective

a. Very short

b. Short

c. Medium

d. Long

Ans: (d)

Unit III

Q .41 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

Ans- d

Q. 42 More expansion of foreign direct investment can boost .

A) Money circulation
B) Demand
C) Employment
D) Unemployment
Answer: C
Q43. More expansion of foreign direct investment can boost-

a) Money Circulation
b) Demand
c) Employment
d) Unemployment

Ans - c
Q,44 The union government adopted new definition of FDI and FPI in 2014. Which of the
given below is incorrect in this regard-

a) The new definition considers 5% investment in capital of an unlisted company as FPI.

b) The new definition considers 5% investment in capital of an unlisted company as FDI.
c) The new definition considers 5% investment in capital of an listed company as FPI.
d) None of the above

Ans- a

Q.45 Government has raised FDI level in Brownfield pharma to what percent under the
automatic route to attract capital and technologies in the pharmaceutical sector?

a) 74
b) 49
c) 50
d) 56

Ans- 74

Q. 46 OLI Theory is also known as-

a) The transaction cost approach

b) The Eclectic Paradigm
c) The strategic linkage theory
d) Perfect market hypothesis

Ans- b

Q.47 Which country leads the inflow of FDI in India?

a) Mauritius
b) France
c) USA
d) UK

Ans-a

Q 48 In which of the following sectors does the Government of India allow more than 50%
FDI?

a) Insurance
b) Print media
c) Telecommunications
d) Infrastructure
e) Both A & C

Ans- e
Q.49 In which of the following sectors does the Government of India allow more than 50%
FDI?

a) Joint venture
b) Strategic alliance
c) Acquisition
d) Merger

Ans- b

Q. 50 Which of the following theories explains the behaviour of late entrants to catch up with
the competition?

a) OLI theory
b) Transition Cost approach
c) The Leapfrogging theory
d) The perfect market Hypothesis

Ans- c

Q. 51 Which of the following types of FDI includes creation of new assets and production
facilities in the host country?

a) Brownfield investment
b) Mergers & Acquisition
c) Strategic Alliance
d) Greenfield investment

Ans- d

Q. 52 Both foreign direct investment (FDI) and foreign institutional investment (FII) are
related to investment in a country. Which of the following is incorrect regarding FDI and FII?

a) Both FII and FDI bring capital into the economy.

b) FII invests in technology-oriented enterprises, whereas FDI invests in traditional

business set ups.

c) The restrictions on the entry of FDI are lower than that on FII.

d) FDI is considered to be more stable thna FII. FII can be withdrawn even at a short notice.

Answer : b

Q. 53 : Which of the following statements is/are correct regarding FDI under automatic
route?
 1. FDI in India under the automatic route does not require prior approval either by
the Government of India or the Reserve Bank of India.
2. Investors are only required to notify the concerned regional office of the RBI before
receipt of inward remittances and file required documents with that office before
the issue of shares to foreign investors.
Select the correct answer using the codes given below.

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Ans : c

Q 54: Which of the following are the components of foreign capital?

1. Grants and loans
2. External commercial borrowings
3. Foreign direct investment
4. Deposits from non-residents
Select the correct answer using the codes given below.

a) 1, 2, 3, and 4

b) 1, 2, and 4 only

c) 1 and 2 only

d) 3 and 4 only

Ans : a
Unit IV & V

Q. 55 The value of Special Drawing Right (SDR) is determined by the basket of

......currencies.
(a) 4

(b) 5

(c) 6

(d) 7

Ans. B
Q. 56 Which of the following is not the objective of the IMF?
(a) To promote international monetary cooperation
(b) To ensure balanced international trade

(c) To ensure exchange rate stability

(d) To provide loan to private sectors

Ans. D

Q. 57 If the Balance of Payment of a country is adverse, then which institution will help
that country?
(a) World Bank

(b) World Trade Organization

(c) International Monetary Fund

(d) Asian Development Bank

Ans- c

Q. 58 Which of the following is known as the Paper Gold?

(a) US Dollar

(b) Pound

(c) Demand draft

(d) Special Drawing Right

Ans. D

Q. 59 Why the World Bank was established?

(a) To promote the International Trade

(b) To reconstruct the economies damaged during the Second World War

(c) To improve the adverse Balance of Payment situation of the nonmember countries

(d) None of the above

Ans. B

Q. 60 Which of the following statement is correct?

(a) Every member country of the IMF automatically becomes the member of the World Bank

(b) The World Bank has 45 founder members

(c) India is not the founding member of the World Bank

(d) IMF is the part of World Bank group

Ans. a

Q. 61 Which of the following is not the function of the World Bank?

(a) To provide long term loan to the member countries

(b) To provide loan to private investors belonging to member countries on its own guarantee

(c) To ensure exchange rate stability

(d) To provides loan mainly for productive activities

Ans. C

Q. 61 Which of the following institutions is not part of the World Bank community?
(a) IBRD

(b) WTO

(c) IDA

(d) IFC

Answer b

Q. 62 The main focus of IBRD and IDA is on :

a) Developed Countries

b) Developing Countries

c) Both of The Above

d) None of The Above

Ans- B

Q. 63 The president is selected by the board of executive directors for a _ year,

renewable term:

a) 5 Year

b) 3 Year

c) 4 Year

d) None of The Above

Ans- a
Q 64 . Which of the following does not form part of current account under balance of
payments?
Export and import of goods

b) Export and import of services

c) Income receipts and payments

d) Capital receipts and payments

Answer : d

Q. 65 Which of the following pairs is not correctly matched with regard to balance of
payment accounts?

a) Import of goods and services – Debit in the current account

b) Receipts of transfer payments – Credit in the current account

c) Direct investment receipt – Credit in the capital account

d) Portfolio investment payments – Debit in the current account

Answer : d

Q. 66 A country is said to be in debt trap if

a) It has to abide by the conditionality imposed by the International Monetary Fund

b) It is required to borrow money to make interest payments on outstanding loans

c) It has been refused loans or aid by creditors

d) The World Bank charges a very high rate of interest on outstanding as well as new loans

Answer : b
Q. 67 Balance in capital account refer to the

a) Nation’s net exports of goods and services

b) Nation’s net exports of financial claims

c) Nation’s net exports of international official reserve assets

d) Nation’s sum of net exports of goods, services and financial claims

Answer : b

Q. 68 Where is the headquarter of the WTO?

(a). New York

(b). Washington DC

(c). Geneva

(d). Austria

Answer: c

Q. 69 Which of the following statement is not true about the WTO?

(a). WTO is a permanent organisation

(b). Uruguay round gave the birth to the WTO

(c).Ministerial Conference is the highest policy making body of the WTO

(d).WTO was officially constituted on 1 January 1991.

Answer: d

Q 70 Which of the following is not the objective of the WTO?

(a). To improve the standard of living of peoples of the member countries

(b). To enlarge production and trade of goods

(c). To protect environment

(d). To improve the Balance of Payment situation of the member countries

Answer: d

Q. 71 Which of the following body is not related to the WTO?

(a). Dispute Settlement Body

(b).Trade Policy Review Body

(c). Council of trade in goods

(d). Exchange Rate Management Body

Answer: d

Q. 72 Which of the followings are called Brettonwoods Twins?

(A) IMF & International Bank for Reconstruction and Development (IBRD)

(B) IMF & World Trade Organisation

(C) IBRD & World Trade Organisation

(D) None of the above

Answer A

Q . Which of the following institution is associated with Dunkel Proposals?

(A) World Bank

(B) International Monetary Fund

(C) World Trade Organization

(D) United Nations Organization

Answer C

Q 74. As per Indian GAAP Financial statements are prepared at :

a) Market value
b) Fair value
c) Cost
d) All of the above

Ans- b

Q. 75 total no. Of IFRS is

a) 14
b) 16
c) 17
d) 18
Ans- C

Q. 76 How many Ind As are there in India

a) 21
b) 39
c) 41
d) 32
Ans- C

Q. 77 The accounting standards are mandatory for-

a) Sole proprietor
b) Companies
c) Firms
d) societies
Ans- B

Q. 78 what is the Impact of Pandemic COVID-19 on international trade.

a) Long term
 b) Short term
c) Both a& b
d) Only a

Ans- C

Q 79 Outsourcing has been raising –

a) Nationally
b) Internationally
c) Both a & b
d) Only a

Ans c

Who are the foundation of economies in a digitised world-

a) Digital innovations
b) Internet
c) Industry 4..0
d) All of the above

Ans- D

All the Best

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