CLASS : T.Y.B . SUBJECT : BUSINESS ECONOMICS VI .

CLASS : T.Y.B.COM.SUBJECT : BUSINESS ECONOMICS – VIQUESTION BANKSr. Choose correct answer.No.1 The classical theory of international trade was given by ----------.[ a) G.V.Haberlarb) David Ricardoc) Heckscherd) None of the above ]2 Under -------- type of cost difference international trade will nottake place.[ a) Absoluteb) Comparativec) Equald) Different ]3 Bertil Ohlin’s theory of international trade is also known as -----[ a) Traditional theory of international tradeb) Opportunity cost theory of international tradec) Modern theory of international traded) Inter regional theory of international trade ]4 Ricardian theory assumes that[ a) Labour is homogeneous and of same efficiency in all thecountriesb) labour is homogeneous within the countryc) Labour differs in efficiency within the countryd) None of the above ]5 In international trade[ a) factors of production move between the countriesb) both factors and commodities move between thecountriesc) commodities move between the countries instead offactors d) None of the above ]6 Gross barter terms of trade takes into account[ a) trade items and unilateral paymentsb) only services

789101112131415c) all the items d) None of the above ]Cultural changes due to international trade are ----------.[ a) only positive b) only negative c) positive and negative d)None of the aboveHecksher-ohlin theory is also known as ----------- theory ofinternational trade.[ a) traditional b) modern c) classical d) none of the above)The developing countries, it is argued, usually[ a) enjoy favourable terms of tradeb) suffer fromadverse terms of tradec) have better income terms oftraded) None of above ]International Trade leads to the following gains :[ a) Higher Productionb) Higher economic welfarec) Increase in consumptiond) All of the above]Portfolio investments are include in ---------- .[ a) Trade balanceb) Current account balancec) Capital account balanced) All of the above]Equilibrium terms of trade according to J.S. Mill is determined bythe condition of --------------.[ a) Reciprocal demandb) Market demandc) Aggregate demandd) None of the above]The terms of trade will be favourable to a country when ---------[ a) The supply of exports is elasticb) The supply ofimports is elasticc) The size of the country is bigd) None of the above ]The gain from trade is maximum if the international terms oftrade are[ a) nearer to the domestic terms of trade of importing countryb) nearer to the internal terms of trade of trading partnerc) equal to exporting countryd) None of the above ]Which one of the following is an argument for free trade ?[ a) Protects domestic industriesb) Promotes self

161718192021sufficiencyc) Helps diversification of industriesd) Promotes efficient allocation of world resources ]A tariff expressed as either a specific or an ad valorem rate,whichever is higher, is known as[ a) General tariffb) Mixed tariffc) Compound tariffd) Countervailing tariff]Countervailing tariffs specifically aim to[ a) give preference to imports from a customs unionb) retaliate to a tariff imposed by a trading partnerc) neutralize the effects of subsides given to the producers inthe exporting countries d) counter dumping by othercountries ]Which of the following is not a NTB ?[ a) Voluntary export restrictionsb) Local contentrequirementc) Administrative barriersd) Tariff ratequota ]The reduction in domestic consumption due to imposition ofquota results in[ a) increase in government revenueb) increase inconsumer’s surplusc) loss of social welfared) increase in social welfare ]A preferential trade area is a trade bloc where[ a) countries agree to reduce or eliminate tariff barriers on allgoods imported from other member nationsb) countries agree to reduce or eliminate tariff barriers onselected goods imported from other member nationsc) countries agree to have a common unified tariff againstnon-membersd) all barriers are eliminated to allow free movement ofgoods, services, capital and labour]The Eurozone crisis was essentially a ---------- crisis.[ a) Immigrationb) Foodc) Sovereign debt

22232425262728d) Political]The ------- was signed to create the EU in 1993.[ a) Treaty of Maastrichtb) Treaty of Romec) Treaty of Lisbond) Treaty of London]A customs union is a trade bloc where[ a) countries agree to reduce or eliminate tariff barriers on allgoods imported from other member nationsb) countries agree to reduce or eliminate tariff barriers onselected goods imported from other member nationsc) countries agree to have a common unified tariff againstnon-membersd) all barriers are eliminated to allow free movement ofgoods, services, capital and labour]Disequilibrium in the BOP caused by changes in the demand orsupply relations of exports or imports or both refer to :[ a) Cyclical disequilibriumb) Short run disequilibriumc) Structural disequilibriumd) None of the above ]The full form of TRIMs is ------[ a) Trade Related Investment Measuresb) Trade relatedInsurance Measuresc) Trade related Investment Methodd) None of the above ]GATS stands for ----------.[ a) General Agreement on Tariff and Servicesb) GeneralAgreement on Trade in Servicesc) General Agreement onTransport and Servicesd) None of the above]After covering deficits on current a/c, excess capital a/c receiptsare added to ----------------[ a) foreign exchange reserveb) IMF accountc) official transfersd) All the above]Private transfers on India’s current account include -------------.[ a) Local withdrawal from NRI rupee depositsb) Foreigncurrency depositsc) Foreign exchange reserves

293031323334353637d) None of the above ]--------- has given mandate to negotiate multilateral rules relatingto services.[ a) World Bankb) IMFc) ADBd) WTO]The highest authority of WTO is --------------.[ a) The Trade Policy Review Bodyb) The General Councilc) The Dispute Settlement Bodyd) The ministerialConference]The effectiveness of devaluation depends on ---------------.[ a) All of the belowb) International cooperationc) Elasticity of demand for merchandise goodsd) Elasticity of demand for services]In the past several years, India’s net invisibles were in ------------[ a) surplusb) deficitc) balanced) None of the above]Autonomous capital flows -------- other items in the balance ofpayments.[ a) depend onb) are related toc) have impact ond) are independent of ]WTO agreements incorporated ------------ proposals.[ a) Adam Smithb) David Ricardoc) Arthur Dunkeld) John Keynes]Foreign direct investment is a part of ------------.[ a) Trade accountb) Capital account c) Currentaccountd) none of the above]Tariffs and quotas are imposed on imports to correct BOP deficitare called as -------- measures.[ a) directb) indirectc) passived) all the above ]Hedging refers to -------- .[ a) foreign exchange speculationb) the acceptance offoreign exchange riskc) the covering of a foreignexchange risk d) interest rate arbitrage ]

38 Speculation in foreign exchange market refers to ------------.[ a) Hedgingb) interest arbitragec) accepting risk tomake profits d) none of the above ]39 The rate at which the foreign currency is exchanged at currentrate is called ------- rate.[ a) spotb) forwardc) arbitraged) none of theabove ]40 Vehicle currency ---------.[ a) a currency of IMFb) a standard internationally acceptedcurrencyc) a currency issued by RBId) none of the above]41 ------- is not a defect of flexible exchange rate.[ a) speculationb) structural unemploymentc)discourages investments d) stability in international monetarysystem ]42 The modern foreign exchange market operates under ---------- ratesystem.[ a) fixedb) highly managed floatc) floatingd) all theabove ]43 -------- is a feature of foreign exchange market.[ a) operates 24 hours for 5 day in a weekb) operates 24hours for all 7 days in a weekc) operates 365 days in a yeard) none of the above]44 ----------- enables an investor to earn high returns while minimizingcapital risks.[ a) Liquidityb) Leveragec) Reservesd) all theabove]45 The function of foreign exchange market that helps in clearinginternational transactions is known as ----------- .[ a) creditb) hedgingc) speculation d) transfer ]46 The foreign exchange rate of a nation is influenced by ------------.[ a) speculatorsb) hedgersc) arbitratorsd) all the

47484950Answerabove ]The demand for foreign currency arises due to -----------.[ a) importsb) exportsc) investments from abroadd) none of the above ]If there is more demand for foreign currency, the foreign currencywill ------------.[ a) depreciateb) appreciatec) nil effectd) none ofthe above]There is a ------- relationship between demand for foreigncurrency and the exchange rate.[ a) directb) straightc) positived) inverse ]LERMS was introduced in India in ----------- .[ a) 1992b) 2000 c) 2012d) 2002]1-b2-c3–c4–b5–c6–a7–c8–b9–b10 - d11 – c12 – a13 – a14 – b15 – d16 – b17 – c18 – d19 – c20 – b21 – c22 – a23 – c24 – c25 – a26 – b27 – a28 – a29 – d30 – d31 – a32 – a33 – d34 – c35 – b36 – a37 – c38 – c39 – a40 – b41 – d42 – c43 – a44 – b45 – d46 – d47 – a48 – b49 – d50 – a

SUBJECT : BUSINESS ECONOMICS – VI QUESTION BANK Sr. No. Choose correct answer. 1 The classical theory of international trade was given by -----. [ a) G.V.Haberlar b) David Ricardo c) Heckscher d) None of the above ] 2 Under ----- type of cost difference international trade will