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Business Economics
Multiple choice question’s

1. According to David Ricardo international Trade is beneficial under ______

cost.
a. Comparative c. Absolute
b. Equal difference in cost d. Maximum
2. Comparative cost theory is static theory because it assumes ___________
a. Labour is homogenous within the country
b. There is no transport cost
c. There is qualitative changes in inputs
d. There is no qualitative and quantitative changes in inputs
3. Ricardian theory assumes that labour is __________ within the country
a. Efficient c . Heterogeneous
b. Inefficient d. Homogenous
4. Hecksher ohlin theory cannot be applied to more than ______________.
a. Two commodities
b. Two countries
c. Several commodities and several countries
d. Few countries
5. According to Hecksher ohlin theory the international trade takes place due to
difference in ________
a. Product price c. Labour efficiency
b. Advanced technology d. Transportation cost
6. The modern theory of trade is based on the principle of ______
a. General equilibrium theory of value
b. Partial equilibrium theory of value
c. Independence of variables
d. Diminishing marginal utility
7. A system that makes it mandatory for domestic producers to use some
proportion of domestic raw material is known as _______
a. Allocate quota c. Global quota
b. Mixing quota d. Import licensing
8. Gross barter terms of trade is associated with__________
 a. Ricardo c. Edgeworth
b. Smith d. Taussig
9. Single and double factoral terms of tarde are associated with
a. Frank taussig c. David ricardo
b. Eli hecksher d. Jacob viner
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.A customs union is a trade bloc where __________
a. Countries agree to reduce or eliminate tariff barriers on all good 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 eliminate to allow free movement of goods , services ,
capital and labour
12.A/ an _______ is graphical representation of reciprocal demand
a. Indifferent curve
b. Laffer curve
c. Offer curve
d. Aggregate supply curve
13.The closer country ‘s offer curve moves towards is domestic exchange rate
______ will be its gain from trade
a. Larger c. Smaller
b. Cheaper d. More expensive
14.________ is a combination of both specific and ad valorem tariffs
a. Tariff rate quota c. Mixed tariff
b. Compound tariff d. Complex tariff
15.The euro replaced the national currencies of 12 EU member nations in the
year ________
 a. 1997 c. 2002
b. 2000 d. 1995
16.The functioning of the EU single market in governed by ___________
a. Treaty of Rome
b. Treaty of Amity and corporation
c. European Financial stability facility
d. Treaty of the functioning of European union
17.The Eurozone crisis was essentially a _______ crisis.
a. Immigration c. Food
b. Sovereign debt d. Political
18.ASEAN was formed in _________
a. 1967 c. 1945
b. 1999 d. 2000
19.TRIMs agreement refers to treating foreign investment at ________ with
domestic investment .
a. Par c. Premium
b. Discount d. Inequity
20.The sum of the total export- import demand elasticity must be _______
a. Equal to one c. Greater than one
b. Zero d. Less than one
21._________ helps to equalize the exchange rate in all part of foreign
exchange market .
a. Hedging c. Speculation
b. Spot rate d. Interest Arbitrage
22.Speculation in foreign exchange market refers to _______.
a. Accepting risk to make profits
b. Hedging
c. Interest arbitrage
d. Accepting risk to make loss
23.Single factoral terms of trade takes into account change in ________
a. Efficiency of factors of production of export goods
b. Export prices
c. Import prices
d. Demand for imports
24.The concept of gross barter terms of trade was introduced by __________
 a. Frank Taussing c. Alfred Marshall
b. Francis Edgeworth d. John S. Mill
25.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
26.__________ is one of the disadvantages of international economic
integration .
a. Cross – border investment flows
b. Employment generation
c. Increasing interdependence
d. Conflict resolution
27.The __________ was signed to create the EU in 1993.
a. Treaty of Maastricht c. Treaty of Rome
b. Treaty of Lisbon d. Treaty of London
28.The reduction in domestic consumption due to imposition quota results in
____________
a. Increase in government revenue
b. Increase in consumer ‘s surplus
c. Loss of social welfare
d. Increase in social welfare
29.WTO was set up on _________
a. 1st January 1995 c. 1st June 1985
b. 31st July 1995 d. 1st January 2000
30.The_______ declaration recognized that the trips agreement should protect
public health
a. Bali c. Doha
b. Bandung d. Singapore
31.The current account in the balance of payments__________
a. Includes merchandise trade and services
b. Is a total of all the visible items of trade
c. Includes Borrowings
d. Includes autonomous and accommodating flows
32.Good performance on _________ has helped india to reduce its current a/c
balance deficit in recent times.
a. Invisible account c. Trade account
b. Capital account d. Good account
33.After covering deficits on current a/c , excess capital a/c receipts are added
to __________
a. Foreign exchange reserves c. IMF account
b. Official transfer d. World bank account
34.WTO agreements incorporated ___________proposals
a. Arthur Dunkel c. Adam smith
b. David Ricardo d. John M. Keynes
35.Terms of trade are expressed as ratio of __________
a. Foreign exchange receipts and payments
b. Price index of exports and imports
c. Balance of payment
d. FDI and portfolio investments
36.The concept of Offer curve was introduced by ________
a. A. Marshall and F Edgeworth
b. Adam Smith and David Ricardo
c. John S. Mill and John M Keynes
d. Alfred Marshall
37.Reciprocal demand expressed in terms of ____________
a. Supply curve c. Offer curve
b. Demand curve d. Cost curve
38.The offer curve of country based on ____________
a. Supply of exports
b. Price of exports
c. Price of imports
d. Relative prices of two commodities

39.Under _____ type of cost difference , international trade will not take place.
a. Absolute c. Equal
b. Comparative d. Difference product
40.The __________ was established in 2015 to bring about economic
integration to create a single market in ASEAN .
 a. ATIGA c. AEC
b. AFTA d. ABIF
41.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
42.Unilateral flows in the balance of payment account refers to _____________
a. Gifts and Grants c. Capital flows
b. Visible goods d. Invisible flow of services
43.________ has given mandate to negotiate multilateral rules relating to
services.
a. World bank c. WTO
b. IMF d. ADB
44.The current account balance of BOP does not include _________
a. FDI c. Service export
b. Unilateral transfer d. Non –factor service
45.Flexible exchange creates ________ in importers and exporters
a. Common risk c. Confidence
b. Safety d. Uncertainty
46.In exchange rate determination the first currency in the currency pair is
called _________
a. Base c. Soft
b. Negotiate d. Hard
47.________ is a feature of foreign exchange market
a. Operates 24 hours for all 7 days in a week
b. Operates 24 hours for 5 days in a week
c. Operates 365 days in a year
d. Operates only 1 day in a week
48.Transactions in foreign exchange market have become quicker due to
___________
a. Government initiatives
b. IMF
c. Advanced technology
d. World bank
49.When disequilibrium takes place due to changes in demand pattern for
exports or imports , it is a case of _________ disequilibrium
a. Long –term c. Cyclical
b. Structural d. Short-term
50.Vehicle currency is ________
a. A standard internationally accepted currency
b. A currency of IMF
c. A currency issued by RBI
d. A currency of Indian Rupee
51.Hedgers enter foreign exchange market ________
a. Discounting rate c. Earn Margin
b. Speculate d. Cover risk
52.The supply of foreign currency is on account of ________
a. Abroad c. Imports
b. Investment d. Exports
53.LERMS was introduced by _________
a. 2000 c. 2002
b. 1992 d. 2012
54.Theory of purchasing power parity ___________
a. Neglects capital account transactions
b. Include transportation cost
c. Include prices of non- traded goods
d. Applies only in short run
55.There is a _________ relationship between demand for foreign currency and
the exchange rate
a. Positive c. Direct
b. Straight d. Inverse
56._______of goods results in demand for foreign currency
a. Export c. Import
b. Sale in domestic market d. Purchase in domestic market
57.__________ is monetary authority ‘s intervention to prevent forex
fluctuations through M policy instruments
a. Open market operations
b. Un-sterilized intervention
c. Sterilized Intervention
 d. Bank rate
58._________ result in people imitating the consumption pattern of foreigners
and demanding more imports
a. Snob appeal c. Demonstration effect
b. Veblen effect d Bandwagon effect
59.A ______ currency is an internationally accepted currency
a. Fait b. Vehicle c. Hard d. Reserve
60.The _________ market in the foreign exchange market is the secondary
price maker
a. Forward b. Spot c. Retail d. Wholesale
61._______ is the current exchange rate
a. Forward rate c. Intermediate rate
b. Equilibrium rate d. Spot rate
62.The exchange rate between two currencies under the gold standard was
determined by _______
a. Mint parity c. Purchasing power parity
b. Exchange rate parity d. Currency parity
63.______ is a system under which the exchange rate is determined in the
market by force of demand and supply
a. Dirty float
b. Crawling float
c. Managed float
d. Free float
64.Between 1947 and 1971 , india followed the ________
a. Par value system
b. Basket peg system
c. Managed flexible system
d. LERMS
65.Under sterilized intervention policy RBI is likely to __________
a. Use OMO
b. Purchasing foreign currencies
c. Sell foreign currencies
d. Interest rate manipulation

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