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International Trade TY BCOM SEM VI

Total questions: 75

Worksheet time: 41mins

Name
Class
Date
1.

The exchange rate between two currencies under the gold standard was determined by______

a)

Mint parity

b)

Purchasing power parity

c)

Exchange rate parity

d)

Currency parity

2.

Under IMF the _____________was accepted as an international reserve currency.

a)

British pound

b)

US Dollar

c)

Euro

d)

Franc

3.

In 1960s the IMF system came under stress due to which of the following reasons?

a)

Huge accumulated surplus in US budget

b)

Limited gold movement between countries

c)

Huge accumulated deficit in US budget

d)

Financial and banking crisis in the US

4.

Under ____________a nation rigidly fixes the exchange rate of its currency to a foreign currency in order to fight inflation and deep financial crisis.

a)

Eurozone Arrangements

b)

Currency board arrangements

c)

Dollarization

d)

Managed flexibility

5.

_____________is a system under which the exchange rate is determined in the market by forces of demand and supply.

a)

Dirty float

b)

Crawling peg

c)

Managed float

d)

Free float

6.

Under ___________ the par values to change by small preannounced amounts or percentages at frequent and specified intervals.

a)

Dirty float

b)

Crawling peg

c)

Managed float

d)

Free float

7.

The IMF started to operate in

a)

1995

b)

1947

c)

1944

d)

1954

8.

Between 1947 and 1971, India followed the

a)

Par value system

b)

Basket-peg system

c)

Managed flexible system

d)

LERMS

9.

LERMS was introduced in

a)

1991

b)

1980

c)

1992

d)

2000

10.

In order to prevent appreciation of the rupee against the US $, the RBI will

a)

Sell US $

b)

Sell bonds

c)

Buy bonds

d)

Buy US $

11.

When the RBI intervenes to maintain a desirable exchange rate, it is termed as

a)

Sterilized intervention

b)

Managed intervention

c)

Unsterilised intervention

d)

None of the above

12.

Under sterilised intervention policy, RBI is likely to

a)

Use OMO

b)

Purchase foreign currencies

c)

Sell foreign currencies

d)

Interest rate manipulation

13.

Since 2015 the rupee has been

a)

Appreciating

b)

Depreciating

c)

Remained stable

d)

None of above

14.

According to the modern theory of international trade, ____________ is responsible for international trade.

a)

Factors endowments

b)

Labour

c)

Money

d)

None of these

15.

___________ refers to the rate at which a country’s exports exchange against its imports.

a)

Foreign exchange

b)

Balance of payments

c)

Terms of trade

d)

Investment rate

16.

Marshall and Edgeworth introduced a geometrical device to explain the gains from trade which is known as ____________

a)

Indifference curve

b)

Isoquant curve

c)

BOP curve

d)

Offer curve

17.

A protectionist policy has the following drawbacks.

a)

Consumers have to pay higher price

b)

Producers get higher profits

c)

Quality of goods may be affected

d)

All of these

18.

A tariff ________

a)

Increases the volume of trade

b)

Reduces the volume of trade

c)

Has no effect on volume of trade

d)

None of these

19.

____________occurs when a group of countries agree to have free movement of factors of production.

a)

Free trade area

b)

Customs union

c)

Common market

d)

Preferential trade agreement

20.

Rich countries have balance of payments deficit.

a)

Sometimes

b)

Never

c)

Always

d)

Every year

21.

The official reduction in the value of a currency with respect to other currencies is known as _________

a)

Revaluation

b)

Appreciation

c)

Devaluation

d)

Depreciation

22.

The _________ declaration recognised that the TRIPs agreement should protect public health.

a)

Bali

b)

Doha

c)

Bandung

d)

Singapore

23.

Foreign exchange market is ___________

a)

Grouping, by electronic means

b)

Located only in London

c)

Located only in New York

d)

None of these

24.

Hedgers enter into a foreign exchange market to_____________

a)

Speculate

b)

Promote exports

c)

Cover risks

d)

Promote imports

25.

Holding everything else constant, an increase in interest rates in India will lead to _________

a)

Capital inflows into India

b)

Depreciation of the INR

c)

Capital outflows from India

d)

A decrease in demand for goods and services

26.

International trade will not take place under cost difference.

a)

Comparative

b)

Absolute

c)

Equal

d)

Average

27.

If PK/PL USA< PK/PL INDIA , india is ______ country.

a)

Labour scarce

b)

Capital abundant

c)

Labour abundant

d)

Labour neutral

28.

Reciprocal demand is expressed in terms of_______

a)

Cost curves

b)

Supply curves

c)

Offer curves

d)

Lorenz curve

29.

The main objective of trade barriers is_____________

a)

to increase employment

b)

to reduce unnecessary imports

c)

to increase exports

d)

to increase imports

30.

Imposition of tariff, raises domestic prices causing fall in consumption of domestic goods is effect of tariffs.

a)

Productive effect

b)

Revenue effect

c)

Protective effect

d)

Transfer effect

31.

Brexit is the name given to the departure of ____________ from the European Union.

a)

Belgium

b)

Britain

c)

Poland

d)

Bulgaria

32.

Current account balance records all the receipts and payments for____________

a)

only visible items

b)

only invisible items

c)

both visible and invisible items

d)

loans taken

33.

Devaluation is ___________ adjustment in value of the currency of the country.

a)

Downward

b)

Upward

c)

Vertical

d)

Neutral

34.

WTO replaced _______ in 1995.

a)

TRIPS

b)

TRIMS

c)

GATT

d)

GATS

35.

As per Purchasing Power Parity theory exchange rate is determined by comparing__________

a)

Prices

b)

Import

c)

Purchasing power

d)

Export

36.

Spot exchange rate is____________

4 lines
37.

As per Purchasing Power Parity theory exchange rate is determined by comparing__________

a)

Prices

b)

Import

c)

Purchasing power

d)

Export

38.

Spot exchange rate is____________

a)

Managed exchange rate

b)

Fixed exchange rate

c)

Floating exchange rate

d)

Current exchange rate

39.

Hedging function is about covering risk through _______________

a)

Speculation

b)

Forward exchange

c)

Static exchange

d)

Backward exchange

40.

According to Ricardo, international trade is beneficial under

a)

Absolute cost

b)

Comparative cost

c)

Equal differences in cost

d)

Hidden cost

41.

According to Heckscher and Ohlin basic cause of international trade is

a)

Difference in factor endowments

b)

Difference in markets

c)

Difference in political systems

d)

Difference in ideology

42.

The concept of offer curve to explain the gains from trade was introduced by

a)

J. M. Keynes

b)

Marshall and Edgeworth

c)

J. S. Mill

d)

Adam Smith

43.

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

44.

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

45.

____________ is one of the disadvantages of international economic integration.

a)

Cross-border investment flows

b)

Employment generation

c)

Increasing interdependence

d)

Conflict resolution

46.

The current account of balance of payment does not include

a)

Balance of visible trade

b)

Import of services

c)

Unilateral services

d)

Foreign investment

47.

Which of the following is not non-monetary measure to correct the disequilibrium in BOP?

a)

Tariff

b)

Import quotas

c)

Export promotion

d)

Devaluation

48.

WTO incorporates proposal made by ______

a)

Arthur Dunkel

b)

Adam Smith

c)

Keynes

d)

Ricardo

49.

A forward rate agreement helps the user to___________

a)

Fix the cost of borrowing

b)

Reduce the cost of borrowing

c)

Cover exchange risk

d)

Avail tax benefit

50.

The foreign exchange market is considered as 24 hour market because______________

a)

It is open all through the day

b)

All transactions are to be settled within 24 hours

c)

At least one market is active at any point of time due to geographic dispersal

d)

A minimum of 24 hours must lapse before any transaction is settled

51.

FERA was replaced by ___________ in India.

a)

FEMA

b)

FMCG

c)

NEER

d)

LERMS

52.

_______________ is the basic cause of international trade according to David Ricardo.

a)

Difference in comparative costs

b)

Difference in availability of factors

c)

Difference in standard of living

d)

Difference in political background

53.

The concept of single factoral terms of trade was introduced by _______

a)

Dorrance

b)

Viner

c)

Taussig

d)

Keyne

54.

The offer curve of a country denotes the offer of its __________ against its imports

a)

Exports

b)

Imports

c)

Capital

d)

Donations

55.

Imposition of tariffs on imports may make a country’s terms of trade ____________

a)

Unfavourable

b)

Favourable

c)

Zero

d)

Neutral

56.

Which of the following is the argument for free trade ?

a)

Self-sufficiency

b)

Infant industry argument

c)

Promotes specialisation

d)

Anti-dumping measure

57.

What caused the Eurozone crisis ?

a)

Political reasons

b)

Debt crisis

c)

Investment crisis

d)

Social crisis

58.

__________ account of BOP records the exports and imports of goods only.

a)

Capital account

b)

Current account

c)

Trade account

d)

Errors and omissions

59.

Devaluation results in __________

a)

Cheaper imports

b)

Cheaper exports

c)

Fall in exports

d)

Rise in imports

60.

Under WTO, TRIPS cover _______

a)

Foreign Investment

b)

Foreign Aid

c)

Services

d)

Patents

61.

__________ operate in foreign exchange market for the purpose of making profit.

a)

Hedgers

b)

Central banks

c)

Bidders

d)

Speculators

62.

Foreign exchange is demanded for _________

a)

Imports

b)

Exports

c)

Exports of services

d)

Capital inflows

63.

Flexible exchange rate system is also known as __________

a)

Fixed exchange rate system

b)

Neutral exchange rate system

c)

Floating exchange rate system

d)

Pegged exchange rate system

64.

__________ is not the assumption of Ricardo’s comparative cost theory.

a)

Labour is perfectly mobile within a country

b)

Technology is constant

c)

Labour is homogeneous

d)

Two countries exchanging more than two commodities

65.

Heckscher-Ohlin theory is based on _________

a)

more countries

b)

more than two goods

c)

two factors

d)

two sides

66.

Commodity terms of trade is also known as_________

a)

Gross barter terms of trade

b)

Net barter terms of trade

c)

Income terms of trade

d)

Utility terms of trade

67.

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

68.

The EU is an example of___________ market.

a)

Money

b)

Capital

c)

Labour

d)

Common

69.

A tariff is a tax on ____________

a)

Domestic goods and services

b)

Foreign goods and services

c)

Quality of goods

d)

Quality of services

70.

In the ________ account, only transactions relating to goods are entered.

a)

Saving

b)

Trade

c)

Balance

d)

Quality

71.

GATs deal with trade in____________

a)

Services

b)

Patent

c)

Copyright

d)

Trademarks

72.

When total exports are more than imports then current account of balance of payment is in _____________

a)

Deficit

b)

Balance

c)

Surplus

d)

Equilibrium

73.

___________ is the current exchange rate between two countries.

a)

Forward exchange rate

b)

Arbitrage

c)

Spot exchange rate

d)

Speculation

74.

Foreign exchange in a country is derived by

a)

Imports of goods

b)

Export of services

c)

Exports of goods

d)

Import of services

75.

FERA was replaced by _________ in India.

a)

FEMA

b)

CARO

c)

NEER

d)

SPOT

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