Online Objective Question Answers

For International Business

NOTE: The answers are boldly marked.
1. Agreement on Textile and clothing was set out as a transitional process on 01 Jan 1995 for
the ultimate removal of quotas by WTO by 01 Jan 2007.
Answer: False
2.The first ever set of multilateral, legally enforceable rules covering international trade in
services is the General Agreement on Trade in services (GATS).
Answer: True
3. Trade Related Investment Measures (TRIMS) doesnt apply for
a)
b)
c)
d)

Measures that affect trade in goods.

Measures that lead to restrictions on quantities.
Discouraging measures that limit a companys imports.
Discouraging measures that limit a companys exports.
4. General Agreement on Trade in Services will not be applicable to

a) Services supplied from one country to another cross border supply

b) Transaction of goods across the border Export Import
c) Individuals traveling from own country to supply services in another presence of natural
persons.
d) Consumers/firms making use of a service in another country consumption abroad.
e) Foreign company setting up subsidiary or branches to provide services in another country
commercial presence.
5.

As a part of WTO guidelines, Agreement on Agriculture (AOA) doesnt consider

a) Direct payments to farmers are permitted.

b) Indirect assistance and support to farmers including R & D support by govt. are not
permitted.
c) Domestic policies which directly effect on production and trade have to be cut back.
d) Least developed countries do not need to make any cuts.
6.
WTO is the only international organization dealing with the rules of trade between
organizations.
Answer: True

7. The limit of holdings by Individual Foreign Institutional Investors in a Company has been
raised from 5 to 10 % of the companys shares, while the aggregate limit has been increased
from 24 to 34 %.
Answer: True
8. Quantitative restrictions refer to limit set by countries to curb
a)
b)
c)
d)

Imports
Exports
Imports & exports
None of the above

a)
b)
c)
d)

9. A Most Favored nation status doesnt necessarily refer to

Same and equal economic treatment
Non-discriminatory treatment
Same tariff rates applicable
Uniform civil code

a)
b)
c)
d)

10. The world trade organization was formed in the year _________ with GATT as it basis.
1993
1994
1995
1996
11. Geocentric staffing policy ensures best qualified people at suitable positions irrespective of
their national and cultural differences.
Answer: True
12. Basic objective of women to talk is to establish rapport and relationship while that of men is
to maintain status and exhibit skills.
Answer: True
13. Power distance Index (PDI) of 77 compared to a world average of 56.5 for India indicates

a)
b)
c)
d)

High level of inequality of power and wealth within the society

Low level of inequality of power and wealth within the society
High level of Political corruption
Low level of Human development Index
14. 2 Specific cultural dimensions that does not have a significant impact on cross-national
business interactions is

a)
b)
c)
d)

Hofstedes five cultural dimensions

Monochromatic vs polychromatic tune
Communication
Geography
15. Professional culture refers to

a) Shared belief of top managers about how they should manage themselves and their employees

b) Shared code of ethics and other commonalities shared by members of a given group
c) Both (a) and (c)
d) None of the above
16.
Theory of Comparative advantage demonstrates that mutually advantageous trade
cannot occur when one trading partner has an absolute advantage.
Answer: False
17. Product life cycle theory states that an exporter country of a particular product can become
an importer country during the product cycle of a product.
Answer: True
a)
b)
c)
d)
e)

18. An attribute that doesnt contribute to Porters Diamond model is

Government
Organized Trade union
Factor Conditions
Demand Conditions
Firm strategy, structure and rivalry

a)
b)
c)
d)
e)

19. _______ theory states that, lack of resources often helps countries to become competitive
Competitive theory
Porters Diamond Model
Theory of Mercantilism
Product life cycle theory
None of the above

a)
b)
c)
d)

20. Theory of Mercantilism propagates

Encourage exports and imports
Encourage exports and discourage imports
Discourage exports and imports
Discourage exports and encourage imports
21. An international acquisition is a cross-border investment in which a foreign investor acquires
an established local firm and makes the acquired local firm a subsidiary business within its
global portfolio.
Answer: True
22. Backward vertical FDI occurs when an MNE enters a host country to produce intermediaries
that are intended to use as inputs in the host country.
Answer: False

a)
b)
c)
d)
e)

23. Identify a factor that doesnt play an important role in attracting FDI
Laws, rule sand regulations
Administrative procedures and efficiency
Cost of resources
Infrastructure related factors
Language

24. B2B sector specific policy of Indian Government is

a) FDI up to 100% subject to condition that they invest 26 % in favor of Indian Public within
5 yrs

b) FDI up to 100%
c) FDI up to 100% subject to condition that they invest 26 % in favor of Indian Public within 10 yrs
d) FDI up to 49%
25. The country that attracts the largest FDI inflow is
India
China
USA
Brazil

a)
b)
c)
d)

26. The term economies of scale refer to the reductions in cost achieved by producing a large
volume of the product.
Answer: True
27. Multi-domestic firms extensive customize both their product offering and marketing strategy
to suit domestic home market only.
Answer: False
a)
b)
c)
d)

28. Firm that operates internationally is able to

earn a greater return from their skills and core competencies
realize location economies where they can be performed most efficiently
realize greater experience curve economies, which reduces the cost of production
All the above

a)
b)
c)
d)

29. General electric follows ___________ as its international operational strategy

Global
International
Multi-domestic
Transnational

a)
b)
c)
d)

30. Factor of Interdependence in Multi-domestic strategy is

Low
Moderate
High
Very High
31. Contractual agreements as global market entry involve a transfer of trademarks or human
skills.
Answer: True
32. When one company acquires another, the one acquired becomes a subsidiary of the
acquiring company.
Answer: True

a)
b)
c)
d)

33. In 90s the global management perception was based on

Standardization v/s adaptation
Globalization v/s localization
Global integration v/s Local Responsiveness
Local responsiveness
34. Which of the following is an advantage of turnkey projects?

a)
b)
c)
d)

Can earn a return on knowledge asset

Will not create a competitor
Tight control of operations
All the above

a)
b)
c)
d)

35. The agreement signed by Ranbaxy Laboratory and Bayer AG of Germany in the year 1999
is an example of
Subsidiary
Joint venture
Strategic International Alliance
License agreement
36. The sales contract is to be prepared only on stamp paper.
Answer: False
37. The risk of direct exporting is relatively lower since the investments are also lesser.
Answer: False

a)
b)
c)
d)

38. CISF pricing includes the following

Commission is paid to the agent involved in the transaction
Cost of the goods exported
Freight & Insurance charges for the goods exported
All of the above

a)
b)
c)
d)

39. When the transaction is of high value, complex In nature and more technical __________
method of the export sales contract is used.
Performa invoice
Purchase order
Sales contact
None of the above

a)
b)
c)
d)

40. Which one of the following is a method for an exporter to get a contract
Proforma invoice
Purchase order
Sales contract
All the above
41. ARE 1 is the form for removal of excisable goods from the factory premises for export
purposes
Answer: True
42. Transit credit is the credit which can be opened by small countries whose credits may not be
readily acceptable in another country.
Answer: True

a)
b)
c)
d)

43. Credits transferable by original beneficiary in favor of secondary beneficiary are known as
Deferred credits
Transit credits
Installment credits
Transferable credits

a)
b)
c)
d)

44. When the exporter, expects the importer, to make the payment immediately upon the draft
being presented to him is called.
Sight Draft.
Usance Draft
Demand draft
Pay Note

45. The basic objective of export Promotion Council is to promote and develop the Exports of
the
a) Particular products of country
b) Only attractive projects of the country
c) Only services industry products of the country.

d) Overall exports of the country.

uestion 1:- The theory of Comparative cost advantage is given by
a) Porter
b) Adam Smith
c) Varnoon
d) D.Richardo
Question 2:- Trade Related Investment Measures (TRIMS) doesnt apply for
a) Measures that lead to restrictions in quantities.
b) Discouraging measures that limit a companys imports
c) Discouraging measures that limit a companys exports.
d) ALL OF THE ABOVE
Question 3:- As a part of WTO guidelines, Agreement on Agriculture (AOA) doesnt consider
a) Direct payments to farmers are permitted.
b) Indirect assistance and support to farmers including R & D support by govt. are not
permitted
c) Domestic policies which directly effect on production and trade have to be cut
back.
d) Least developed countries do not need to make any cuts.
Question 4:- A Most Favored nation status doesnt necessarily refers to
a) Same and Equal Treatment
b) Non-discriminatory Treatment
c) Same tariff rates applicable
d) Uniform civil code
Question 5:- Power distance Index (PDI) of 77 compared to a world average of 56.5 for India
indicates
a) High level of inequality of power and wealth within the society
b) Normal Power and Wealth
c) High level of political corruption
d) Low level of Human Development Index
Question 6:- Identify a factor that doesnt play an important role in attracting FDI
a) Language
b) Laws, rules and regulations
c) Cost of resources

d) Infrastructure related factors

Question 7:- Factor of Interdependence in Multi-domestic strategy is
a) LOW
b) MODERATE
c) HIGH
d) VERY HIGH
Question 8:- The first phase of globalization started around 1870 and ended with
a) The World War I
b) The World War II
c) The Establishment of GATT
d) In 1913 when GDP was high
Question 9:- An attribute that doesnt contribute to Porters Diamond model is
a) Government
b) Organized Trade union
c) Factor Conditions
d) Demand Conditions
Question 10:- Which of these is a characteristic of multinational corporations>
a) At least one -third directors are foreign nationals
b) The company does 40% of its business in foreign markets
c) The overseas markets are larger than the domestic market
d) The affiliates are responsive tio a number of important environmental forces
Question 11:- According to this theory the holdings of a countrys treasure primarily in the form
of gold constituted its wealth.
a) Gold Theory
b) Ricardo Theory
c) Mercantilism
d) H .O. THEORY
Question 12:- The Theory of Absolute Cost Advantage is given by
a) Adam smith
b) D. Richardo
c) Raymond Varnoon
d) Porter
Question 13:- The Theory of Relative Factor Endowments is given by
a) Ohilin-Hecksher
b) FY Taylor
c) Richardo
d) Porter
Question 14:- is application of knowledge which redefine the boundaries of global
business
a) Cultural Values
b) Society
c) Technology
d) Economy

Question 15:- Capitalistic, communistic and mixed are the types of

a) Economic system
b) Political system
c) Social System
d) Cultural Attitudes
Question 16:- General Agreement on Trade in Services will not be applicable to
a) Services supplied from one country to another cross border supply
b) Transaction of goods across the border Export Import
c) Individuals traveling from own country to supply services in another presence of natural
persons.
d) Consumers/firms making use of a service in another country consumption
abroad
Question 17:- Quantitative restrictions refer to limit set by countries to curb
a) Imports
b) Exports
c) Imports and Exports
d) All of the above
Question 18:- India is an
a) Emerging economy
b) Developed economy
c) Less developed economy
d) None of these
Question 19:- The world trade organization was formed in the year _________ with GATT as it
basis.
a) 1992
b) 1993
c) 1995
d) 1994
Question 20:- ________theory states that, lack of resources often helps countries to become
competitive
a) Competitive theory
b) Porters Diamond Model
c) Theory of Mercantilism
d) Product life cycle theory
Question 21:- Theory of Mercantilism propagates
a) Encourage imports and exports
b) Encourage exports and discourage imports
c) Discourage imports
d) None of these
Question 22:- The country that attract the largest FDI inflow is
a) USA
b) INDIA
c) CHINA

d) BRAZIL
Question 23:- General electric follows ___________ as its international operational strategy
a) GLOBAL
b) TRANSNATIONAL
c) INTERNATIONAL
d) MULTI-DOMESTIC
Question 24:- Typically the last step in the internationalization process is:
a) Licensing
b) Exporting
c) Wholly owned subsidiaries
d) Foreign Direct Investment
Question 25:- Which of the following is an advantage of turnkey projects?
a) Can earn a return on knowledge asset
b) Will not create a competitor
c) Tight control of operations
d) All the above
Question 26:- Which of these is/are the characteristic of a licensing agreement
a) The licensor might provide access to some of its patents or trademarks
b) The licensor might provide access to technology
c) It might be used to avoid the risks of foreign involvement
d) All of the above
Question 27:- IBRD (International Bank for Reconstruction and Development) also known
as
a) EXIM Bank
b) World Bank
c) IMF
d) International Financial Bank
Question 28:- Ultimately was replaced by the .on 1st Jan
1995
a) GATT/WTO
b) GATS/IMF
c) WTO/WORLD BANK
d) WORLD BANK/WIPO
Question 29:- Which is the right sequence of a 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
Question 30:- Subsidiaries consider regional environment for policy / Strategy formulation is
known as
a) Polycentric Approach
b) Regiocentric Approach
c) Ethnocentric Approach

d) Geocentric Approach