TYBCOM - Sem VI - MCQs of Business Economics VI

1
SHETH T.J. EDUCATION SOCIETY’S

SHETH NKTT COLLEGE OF COMMERCE AND SHETH JTT COLLEGE OF ARTS,
THANE
Department of Economics
T. Y. B. Com – Semester -VI
Multiple Choice Questions of Business Economics VI
Module -I - Introduction to International Trade
1. It is argued that the developing countries usually ………..

a. Enjoy favorable terms of trade
b. Suffer from adverse terms of trade
c. Have better income terms of trade
d. Have more income
2. Cultural changes due to international trade are ……….

a. Positive
b. Negative
c. Positive and negative both
d. Always negative
3. The gain from trade are ………….

a. Only economic gains
b. Economic and non-economic gains
c. Domestic gains
d. Rural benefits
4. An offer curve is a ……….

a. Graphical representation of reciprocal demand
b. Same as supply curve
c. Graphical representation of reciprocal prices
d. Schedule of goods and services
5. Net barter terms of trade are criticized on the basis of ………

a. Excess consideration of quality of good
b. Neglect of productivity of inputs
c. Emphasis on price of the export and import
d. Neglect of quantity of product
6. The offer curves are ………. curves.

a. Demand
b. Supply
Prepared for Sheth NKTT College, Thane pg. 1

2
c. Demand and Supply

d. Different from demand and supply curves
7. An international trade ……….. consumption level of participating countries.

a. Increases
b. Decreases
c. Stabilizes
d. Does not affect
8. An international trade increases welfare of ………… countries.

a. Exporting
b. Importing
c. Both importing and exporting
d. Only backward
9. International trade results in ……….. production due to specialisation.

a. increased
b. reduction
c. no change in
d. rivalry
10. The gains from trade are ….. confined to economic aspects only.
a. not
b. always
c. mostly
d. possibly
11. J. S. Mill introduced the theory of …………. Demand

a. Derived
b. Rising
c. Reciprocal
d. Falling
12. Heckscher-Ohlin theory is based on ……… in both commodity and factor

markets.
a. Perfect competition
b. Monopoly
c. Oligopoly
d. Duopoly
Module -II - Commercial Policy
13. The term free trade is used to describe…….. trade policy

a. a liberal

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b. a regulated
c. a domestic
d. a regional
14. ………………is an argument of Free trade policy

a. Infant industry
b. Diversification
c. Promotion of efficiency
d. Pauper labour
15. …………….. is an argument against Free Trade

a. Destruction of domestic industries
b. Destruction of foreign industries
c. Protection of undeserving industries
d. Unemployment in export sector
16. A tariff is a ……….. imposed on commodities that are traded across the national
border of a country
a. Subsidy
b. Tax
c. Price
d. Revenue
17. ………… are usually groups of countries in specific regions that manage and
promote trade in a region.
a. Trade Blocs
b. Cooperative society
c. Commercial banks
d. Consumer society
18. The primary objective of any economic integration is to ………… the welfare of
the people in the region.
a. Compensate
b. Compare
c. Increase
d. Stabilize
19. Loss of sovereignty is one of the disadvantages of …………..

a. Social institutions
b. Economic integration
c. Political groups
d. Physical growth
20. European Union is a group of …… countries.

a. 20
b. 28

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c. 40
d. 10
21. Eurozone crisis started in the year………

a. 2008
b. 2000
c. 2015
d. 2020
22. ………….. was one of the reasons for Brexit.

a. Gain of sovereignty
b. Economic opportunity
c. Social responsibility
d. Migration
23. The ASEAN was established on ………..

a. 8th October 1967
b. 8th August 1967
c. 10th June 1968
d. 20th December 1968
24. …………… ..is one of the aims of ASEAN

a. To promote Southeast Asian studies
b. To promote equality USA
c. To generate more employment in African countries
d. To stabilize prices in India
25. The ASEAN is a regional intergovernmental group of ……… Southeast Asian

countries
a. 16
b. 19
c. 20
d. 10
Module – 3 Balance of Payments and WTO

26. Gifts & charities account are also known as _________in balance of payments.
a. Export
b. Import
c. Unilateral Transfer
d. Long term borrowing
27. Trade account of balance of payment is also known as _______ account.

a. Current
b. Capital

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c. Visible
d. Invisible
28. Reducing the value of domestic currency in term of foreign is called _____.
a. Deflation
b. Tariff
c. Exchange Control
d. Devaluation
29. Unilateral flows in the balance of payments account related to _______

a. Capital Flows
b. Foreign Direct investments
c. Borrowings
d. Grants
30. Autonomous capital flows _______ other items in the balance of payments.
a. Are independent of
b. Depend on
c. Are related to
d. Have impact on
31. The current account in the balance of payments _______________.

a. Is a total of all the visible items of trade
b. Includes merchandise trade & services
c. Always shows a surplus
d. Includes autonomous accommodating flows
32. A deficit in India’s balance of payments in recent times is due to

______________.
a. Fall in the price of crude oil
b. Increase in exports as compared to imports
c. Increase in imports as compared to exports
d. Increase in capital inflows
33. When total exports are more than total imports the current account balance is in
______________.
a. Deficit
b. Balance
c. Surplus
d. Both Deficit & Surplus

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34. Foreign Direct Investment is included in___________.

a. Trade account
b. Current account
c. Capital account
d. Fixed account
35. External borrowing is treated as ________.

a. Accommodative Flow
b. Autonomous flow
c. Invisible flow
d. External flow
36. In the past several years, India’s capital account balance was in ______.
a. Surplus
b. Deficit
c. Equilibrium
d. Zero
37. The agreement on Agriculture does not aim at ______

a. Increasing export subsidies
b. Improving market access
c. Reducing domestic subsidies
d. Reducing domestic support
38. The foreign exchange reserves in India does not include_____

a. Special Drawing Rights
b. Foreign currency assets
c. Gold reserves
d. Fixed deposits
Module 4 – Foreign Exchange Market
39. is the current exchange rate between two countries.

a. Spot exchange rate
b. Forward exchange rate
c. Arbitrage
d. Speculation
40. The functions of foreign exchange market does not include

a. Provision of facilities for transfer of funds

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b. Provision of short term finance for trade.

c. Provision of facilities for trading.
d. Provision of subsidies
41. Hedging operations helps to cover the risks.

a. Exporters
b. Importers
c. Speculators
d. Consumer
42. Hedging refers to ___________.

a. Foreign exchange speculation
b. Covering of foreign exchange risk
c. Acceptance of foreign exchange risk
d. Interest rate arbitrage
43. Demand for foreign currency is influenced primarily by .

a. Size of export
b. Size of import
c. Size of saving
d. Size of investment
44. Forward market in foreign exchange market refers to _____market

a. Short term
b. Long term
c. Current
d. Short and long run
45. The main objectives of RBI’s intervention in the Indian foreign exchange market
are _______________.
a. To ensure safety of the country
b. To promote trade
c. To reduce income inequalities
d. To maintain exchange rate stability
46. Under the flexible exchange rate system exchange rate is determined by _ .
a. The monetary authority
b. The price of gold
c. The demand & supply of foreign exchange
d. Commercial banks

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47. Flexible exchange rate creates ________ in importers and exporters.

a. Confidence
b. Safety
c. Uncertainty
d. Guarantee
48. Transactions in foreign exchange market have become quicker due to ______.
a. IMF
b. World bank
c. Government initiatives
d. Advanced technology
49. PPP theory ignores capital flows on account of ______

a. Capital account
b. Trade account
c. Current account
d. Saving account
50. LERMS was introduced in India in _______.

a. 1991
b. 1993
c. 2002
d. 2005

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1

SHETH T.J. EDUCATION SOCIETY’S

T. Y. B. Com – Semester -VI

Multiple Choice Questions of Business Economics VI

Module -I - Introduction to International Trade

1. It is argued that the developing countries usually ………..

2. Cultural changes due to international trade are ……….

3. The gain from trade are ………….

4. An offer curve is a ……….

5. Net barter terms of trade are criticized on the basis of ………

6. The offer curves are ………. curves.

Prepared for Sheth NKTT College, Thane pg. 1

c. Demand and Supply

7. An international trade ……….. consumption level of participating countries.

8. An international trade increases welfare of ………… countries.

9. International trade results in ……….. production due to specialisation.

11. J. S. Mill introduced the theory of …………. Demand

12. Heckscher-Ohlin theory is based on ……… in both commodity and factor

Module -II - Commercial Policy

13. The term free trade is used to describe…….. trade policy

Prepared for Sheth NKTT College, Thane pg. 2

14. ………………is an argument of Free trade policy

15. …………….. is an argument against Free Trade

19. Loss of sovereignty is one of the disadvantages of …………..

20. European Union is a group of …… countries.

Prepared for Sheth NKTT College, Thane pg. 3

21. Eurozone crisis started in the year………

22. ………….. was one of the reasons for Brexit.

23. The ASEAN was established on ………..

24. …………… ..is one of the aims of ASEAN

25. The ASEAN is a regional intergovernmental group of ……… Southeast Asian

Module – 3 Balance of Payments and WTO

27. Trade account of balance of payment is also known as _______ account.

Prepared for Sheth NKTT College, Thane pg. 4

29. Unilateral flows in the balance of payments account related to _______

31. The current account in the balance of payments _______________.

32. A deficit in India’s balance of payments in recent times is due to

Prepared for Sheth NKTT College, Thane pg. 5

34. Foreign Direct Investment is included in___________.

35. External borrowing is treated as ________.

37. The agreement on Agriculture does not aim at ______

38. The foreign exchange reserves in India does not include_____

Module 4 – Foreign Exchange Market

39. is the current exchange rate between two countries.

40. The functions of foreign exchange market does not include

Prepared for Sheth NKTT College, Thane pg. 6

b. Provision of short term finance for trade.

41. Hedging operations helps to cover the risks.

42. Hedging refers to ___________.

43. Demand for foreign currency is influenced primarily by .

44. Forward market in foreign exchange market refers to _____market

Prepared for Sheth NKTT College, Thane pg. 7

47. Flexible exchange rate creates ________ in importers and exporters.

49. PPP theory ignores capital flows on account of ______

50. LERMS was introduced in India in _______.

Prepared for Sheth NKTT College, Thane pg. 8

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