This document contains 55 multiple choice questions related to international business. The questions cover topics such as analyzing business environments, definitions of international business terms, forms of foreign direct investment, trade agreements and organizations like the WTO, IMF, World Bank, NAFTA and the EU.

1. INTERNATIONAL
BUSINESS
MULTIPLE CHOICE QUESTIONS

2. Q. 1) Analyzing the business environment best assists in
 Identifying key competitive forces; identifying competitive position;
identifying key opportunities, threats, strengths and weaknesses.
 Auditing macro environmental influences; identifying key competitive
forces; identifying competitive position; identifying key opportunities and
threats.
 Auditing external and organizational factors; identifying key competitive
forces; identifying competitive position; identifying key opportunities and
threats.
 Assessing historical trends; auditing environmental dangers; identifying
strategic capabilities; identifying competitive position
Answer: Auditing macro environmental influences; identifying key

3. Q. 2) Ultimately ………………was replaced by the
…………….on 1st Jan 1995
 GATS, WTO
 WTO, GATT
 GATT, WTO
 IMF, GATT
Answer: GATT, WTO

4. Q. 3) Which of the following best defines international
business?
 It includes all economic flows between two or more countries.
 It includes all private economic flows between two or more
countries.
 It includes all business transactions involving two or more
countries, whether the transactions are conducted by private or
governmental organizations.
 It includes all business transactions in countries other than your
home country.
Answer: It includes all business transactions involving two or more
countries, whether the transactions are conducted by private or

5. Q. 4) What is a Greenfield investment?
 It is an investment in the form of a controlling ownership in a
business in one country by an entity based in another country.
 Building new production facilities in the foreign country
 A company purchases or leases an existing facility
 Investment in a joint venture located in a foreign market
Answer: Building new production facilities in
the foreign country

6. Q. 5) Which of the following approaches is most
appropriate for an organization with little experience in
international markets?
 Joint venture
 Acquisition
 Strategic alliance
 Exporting
 Answer: Exporting

7. Q. 6) Ethnocentric orientation is a predisposition towards
—
 the home country
 the global economy
 regionalism
 geographically proximate regions
 Answer: the home country

8. Q. 7) When an international firm follows a strategy of choosing
only from the nationals of the parent country, it is called
 polycentric approach
 geocentric approach
 ethnocentric approach
 None of the above
 Answer: ethnocentric approach

9. Q. 8) When the firms adopt a strategy of limiting recruitment to
the nationalities of the host country where the branch is
located, it is called
 polycentric approach
 geocentric approach
 ethnocentric approach
 None of the above
 Answer: polycentric approach

10. Q. 9) Which is the right sequence of stages of
Internationalization?
 Domestic, Transnational, Global, International,
Multinational
 Domestic, International, Multinational, Global,
Transnational
 Domestic, Multinational, International, Transnational,
Global
 Domestic, International, Transnational, Multinational,
Global

11. Q. 10) Which one is not the form of FDI?
 Purchase of existing assets in foreign currency.
 New Investment in Property, plant and
equipment.
 Making investment in the mutual funds
 Transfer of many type of asset
 Answer: Making investment in the mutual
funds

12. Q. 11) What is Entrepot?
 It refers to import of goods not for consumption in home
country but for exporting them to another country.
 It refers to selling goods or services to foreign countries.
 It refers to buying goods or services from foreign
countries
 It refers to the expansion of business functions from
domestic to any foreign country
 Answer: It refers to import of goods not for
consumption in home country but for exporting

13. Q. 12) The companies globalize their operations
through different means:
 Exporting directly
 Licensing/Franchising
 Joint ventures
 All the above
 Answer: All the above

14. Q. 13) The process of shifting production from a domestic
to a foreign location is known as _____.
 off-shoring
 out-sourcing
 service imports
 a turnkey operation
 Answer: off-shoring

15. Q. 14) Capital is available in large proportion and labour is less,
then that economy is known as ……………..
 Capital Intensive
 Labour Intensive
 Money economy
 None of above
 Answer: Capital Intensive

16. Q. 15) ________ are quotas that lead to a complete
abolishment of trade
 voluntary export restraints
 embargoes
 nontariff barriers
 orderly marketing agreements
 Answer: Embargoes

17. Q. 16) Similar to import tariffs, import quotas tend to result
in
 decreased producer surplus
 increased consumer surplus
 increased government revenue
 higher prices and reduced imports
 Answer: higher prices and reduced
imports

18. Q. 17) A tax of 20 cents per unit of imported cheese would
be an example of:
 Compound tariff
 Effective tariff
 Ad valorem tariff
 Specific tariff
 Answer: Specific tariff

19. Q. 18) Nontariff trade barriers could include all of the
following except
 domestic content laws
 government procurement policies
 health, safety, and environmental standards
 antidumping/countervailing duties applied to
imports
 Answer: antidumping/countervailing
duties applied to imports

20. Q. 19) Identify the odd one:
 Ad valorem Duty
 Compound duty
 Domestic content requirement
 Specific Duty
 Answer: Domestic content requirement

21. Q. 20) A case of international price discrimination in which an exporting firm
sells at a lower price in a foreign market than it charges in other markets, is
known as
 Non-Dumping
 Dumping
 Anti-Dumping
 None of the above
 Answer: Dumping

22. Q. 21) Developing nations often maintain that industrial countries permit raw
materials to be imported at very low tariff rates while maintaining high tariff
rates on manufactured imports. Which of the following refers to the above
statement?
 Tariff-quota effect
 Nominal tariff effect
 Tariff escalation effect
 Protective tariff effect
 Answer: Tariff escalation effect

23. Q. 22) Among the ascribed group memberships is
________.
 religion
 national origin
 profession
 political affiliation
 Answer: national origin

24. Q. 23) Analyzing the business environment best assists in
 Identifying key competitive forces; identifying competitive position;
identifying key opportunities, threats, strengths and weaknesses.
 Auditing macro environmental influences; identifying key competitive
forces; identifying competitive position; identifying key opportunities and
threats.
 Auditing external and organisational factors; identifying key competitive
forces; identifying competitive position; identifying key opportunities and
threats.
 Assessing historical trends; auditing environmental dangers; identifying
strategic capabilities; identifying competitive position
 Answer: Auditing macro environmental influences; identifying key

25. Q. 24) _________ is the form of government in which one person or political part
exercises absolute control whereas __________ refers to a political system in which
government is by the people, exercised either directly or through elected
representatives.
 Individualism, collectivism
 Totalitarianism, democracy
 Democracy, totalitarianism
 Socialism. Democracy
 Answer: Totalitarianism, democracy

26. Q. 25) Which of the following is true of
cultures?
 Cultures are multifaceted
 Cultures are stable and unchanging
 Cultural knowledge is innate rather than
learned
 Cultures give us one, single identity rather
than several overlapping identities
 Answer: Cultures are multifaceted

27. Q. 26) The following are examples of political risk actions
 local-content laws and exchange controls.
 import and labour restrictions
 price and tax controls
 all of the above
 Answer: all of the above

28. Q. 27) In relation to the PESTEL framework, which of the
following statements is correct?
 It assists in the assessment of organisational strengths and
weaknesses.
 It allows a detailed analysis of the structure of an industry.
 It can be used as a checklist to understand the different
environmental influences in the macro environment.
 Takes an historical perspective on the main political, economic,
socio-cultural, technological, environmental and legal factors
 Answer: It can be used as a checklist to understand the
different environmental influences in the macro environment

29. Q. 28) The following is not a component of culture
 Attitude
 Beliefs
 Education
 Life expectancy
 Answer: Life expectancy

30. Q. 29) The term _________ refers to a political system
that stresses the primacy of the rights and role of the
community
 Socialism
 Democracy
 Individualism
 Collectivism
 Answer: Collectivism

31. Q. 30) Which of the variables is not used by marketers for
demographic segmentation?
 Age
 Income
 Gender
 Poverty
 Answer: Poverty

32. Q. 31) Cultural homogeneity refers to —
 inter-cultural movements
 adaptation to the local culture
 cross-cultural movements
 cultural uniformity
 Answer: cultural uniformity

33. Q. 32) The international movement of production factors takes
place primarily because of _______.
 governmental incentives
 perceptions of earning higher returns
 political (persecution and war dangers)
 inadequate border controls to prevent the
movements
 Answer: perceptions of earning higher
returns

34. Q. 33) By design, the Human Development Index
aims to capture _____ progress in human
development
 medium-term
 long-term
 Immediate
 short-term
 Answer: long-term

35. Q. 34) Per capita GNI is determined by ____ the size of
GNI of a nation by its total population
 Dividing
 Multiplying
 Subtracting
 Adding
 Answer: Dividing

36. Q. 35) A general, sustained rise in prices measured
against a standard level of purchasing power is called
_______.
 cost of living
 Hyperinflation
 relative income
 Inflation
 Answer: Inflation

37. Q. 36) The unemployment rate is a measure
of:
 all people who do not have employment.
 all people who have been fired or laid-off.
 all people who do not have a job but are actively looking for a job.
 all people who do not make a living wage.
 Answer: all people who do not have a job but
are actively looking for a job.

38. Q. 37) Key components of the balance of payments
statements include which of the following pairs:
 Concurrent account, capital account.
 Current account, capital account.
 Capital account, contemporary account.
 Current account, cash account.
 Answer: Current account, capital
account.

39. Q. 38) The three broad types of economic
systems are:
 market economy, command economy, mixed economy.
 market economy, hybrid economy, and command economy.
 market economy, collective economy, production economy.
 individualist economy, mixed economy, and state-directed
economy.
 Answer: market economy, command
economy, mixed economy
.

40. Q. 39) Which one of the following is true
statement?
 A balance of trade deals with export and import of invisible items
only.
 A balance of payment deals with both visible and invisible items.
 The current account is not a component of balance of payment.
 All the above.
 Answer: A balance of payment deals with
both visible and invisible items.

41. Q. 40) Foreign Exchange and Foreign
currencies in India are governed by
 RBI
 Banking Regulation Act
 FEMA Act
 SEBI Act
 Answer: FEMA Act

42. Q. 41) ______ is an umbrella term for economic policies, development
interventions and private initiatives aimed at improving the trade performance of
the country.
 Economic development
 Import promotion
 Trade promotion
 Trade area
 Answer: Trade promotion

43. Q. 42) At present (as on 31/06/2020) how many members
are in the WTO?
 160
 164
 189
 193
 Answer: 164

44. Q. 43) Who is the current (2020) President of the
World Bank Group?
 Robert Zoellick
 David Malpass
 Christine Lagarde
 Jim Yong Kim
 Answer: David Malpass

45. Q. 44) Which of the following is not matched
correctly?
 IBRD: 1946
 IFC: 1948
 IDA: 1960
 MIGA: 1988
 Answer: IFC: 1948

46. Q. 45) The main focus of IBRD and IDA is on
___________:
 Developed Countries
 Developing Countries
 Both of The Above
 None of The Above
 Answer: Developing Countries

47. Q. 46) The main function(s) of WTO is/are:
 To handle trade disputes constructively.
 To help promote peace among business
community.
 To provide rules that make life easier for all
people involved in foreign trade.
 All of the above
 Answer: All of the above

48. Q. 47) The main objective of International
Monetary Fund (IMF) was to
 Promote International trade
 Help economically backward countries
 Maintain stable exchange rates
 Promote international liquidity
 Answer: Maintain stable exchange
rates

49. Q. 48) The goal of _______________ is to promote domestic and international
trade and reduce trade barriers while fostering conducive environment for the
growth of trade and industry of India
 Export Promotion Councils (EPCs)
 Export Inspection Council (EIC)
 Indian Institute of Foreign Trade (IIFT)
 Associated Chambers of Commerce and Industry
of India (ASSOCHAM)
 Answer: Associated Chambers of Commerce
and Industry of India (ASSOCHAM)

50. Q. 49) Which of the following nations form the members of
NAFTA?
 the United Kingdom, France, and Italy
 Canada, France, Britain, and Germany
 the United States, Mexico, and Brazil
 the United States, Canada, and Mexico
 Answer: the United States, Canada, and
Mexico

51. Q. 50) Which of the following statements explains the
advantages of the euro?
 The euro has not been widely traded since its introduction.
 Accounting records must still be reconciled to the home currency.
 Companies still have difficulty establishing pricing policies.
 The introduction of the euro has eliminated currency as a barrier to
trade.
 Answer: The introduction of the euro has
eliminated currency as a barrier to trade.

52. Q. 51) ________ refers to agreement between groups of countries in
geographical region to the free flow of goods, services and factors of
production between each other countries.
 Regional Economic Integration
 Trade creation
 Trade diversion
 Trade deflection
 Answer: Regional Economic
Integration

53. Q. 52) The implementation of a common market
involves all of the following except:
 elimination of trade restrictions among member
countries
 a common tax system and monetary union
 prohibition of restrictions on factor movements
 a common tariff levied in imports from nonmembers
 Answer: a common tax system and
monetary union

54. Q. 53) A situation where any advantage given by one member of the WTO to
another member is extended to all WTO members is referred to as
 Trade Diversion
 Inter Regional Principle
 Most Favoured Nation
 Least Traded Nation
 Answer: Most Favoured Nation

55. Q. 54) Trade Related Investment Measures (TRIMS) doesn’t
apply for
 Measures that affect trade in goods.
 Measures that lead to restrictions on quantities.
 Discouraging measures that limit a company’s imports.
 Discouraging measures that limit a company’s exports.
 Answer: Measures that lead to restrictions on
quantities.

56. Q. 55) Which of the following sets of initials refers to a major international
agreement seeking to protect 'knowledge-based' aspects of international
trade?
 TRIMS
 OECD
 TRIPS
 UNESCO
 Answer: TRIPS

57. Q. 56) TRIPS (Trade-Related Aspects of Intellectual Property
Rights) agreement is administered by:
 World Bank (WB)
 United Nations Organization (UNO)
 World Trade Organization (WTO)
 United Nations Conference on Trade and
Development (UNCTAD)
 Answer: World Trade Organization (WTO)

58. Q. 57) Psychographic segmentation is
based on:
 the quantitative side of consumer demographic
analysis.
 the quantitative side of consumer geographic analysis.
 individuals' residential patterns and life-cycle
preferences.
 grouping people according to their psychological
characteristics, values, and lifestyles.
 Answer: grouping people according to their

59. Q. 58) Income and population are two variables that
can be used in _______________ segmentation:
 psychographic
 behavioural
 lifestyle
 demographic
 Answer: demographic

60. Reference
 Questions are sourced from SWAYAM Course
International Business Co-ordinated by Dr. J.
K. Nayak, faculty in the Department of
Management Studies, IIT Roorkee.