Principles of International Business for Tourism Multiple Choice Questions
1. Coverage of risks due to fluctuating exchange rates is known as ———
A. Speculation
B. Arbitrage
C. Hedging
D. Forward rate
Answer: C. Hedging
2. The demand for foreign exchange is determined by country’s ————
A. Exports
B. Imports
C. Exports and imports
D. None of these
Answer: B. Imports
3. Purchasing power purity theory was introduced by ————
A. Fisher
B. Cassel
C. Marshall
D. Paul Einzing
Answer: B. Cassel
4. EURO is the currency of —————-
A. European Union
B. Europe
C. Britain
D. None of these
Answer: A. European Union
5. The currency of Italy is —————-
A. Euro
B. Dollars
C. Yen
D. Pound
Answer: A. Euro
6. EXIM Bank of India was set up in —————
A. 1981
B. 1982
C. 1983
D. 1984
Answer: B. 1982
7. The difference between buying and selling rate is called
A. ASK rate
B. Bid rate
C. Spread
D. SWAP
Answer: C. Spread
8. The rate at which the exchange dealer is ready to buy a currency as known as —————-
A. Ask rate
B. SWAP rate
C. Spread
D. Bid rate
Answer: D. Bid rate
9. The members of the IMF are the members of ————–
A. IFC
B. IDA
C. ADB
D. IBRD
Answer: D. IBRD
10. World Bank is also known as ——————–
A. IBRD
B. IFC
C. IDA
D. MIGA
Answer: A. IBRD
11. Balance of Trade is a —-
A. Stock Concept
B. Flow Concept
C. Stock and Flow Concept
D. None of these
Answer: B. Flow Concept
12. Which one of the following items in the balance of payments is invisible
A. Travel
B. Shipping
C. Export of goods
D. Gifts
Answer: A. Travel
13. Gold standard is an example of
A. Floating exchange rate
B. Fixed exchange rate
C. Crawling peg
D. Crawling bands
Answer: B. Fixed exchange rate
14. Flexible exchange rate is based on the concept of
A. Supply
B. Demand
C. Demand and supply
D. None of these
Answer: C. Demand and supply
15. A BOP surplus can be corrected through ————–
A. Export promotion
B. Exchange control
C. Appreciation
D. Increase in interest
Answer: C. Appreciation
16. BOP deficit can be corrected through ————–
A. Increasing imports
B. Increasing exports
C. Increase in interest rates
D. None of these
Answer: B. Increasing exports
17. Foreign exchange is demanded by ————-
A. Exporters
B. Domestic travelers
C. Importers
D. None of these
Answer: C. Importers
18. Devaluation will improve when elasticity of demand of country’s export and import is
A. Less than one
B. Equal to one
C. Infinity
D. Greater than one
Answer: D. Greater than one
19. Deficit BOP can be solved by ——————–
A. Expenditure switching policies
B. Expenditure reducing policies
C. Both a and b
D. None of these
Answer: C. Both a and b
20. Floating exchange rate become common in —————-
A. 1980’s
B. 1970’s
C. 1960’s
D. 1950’s
Answer: B. 1970’s
21. The ASEAN was established in ——————–
A. 1967
B. 1977
C. 1987
D. 1999
Answer: A. 1967
22. The difference between the value of goods and services exported and imported is called ————-
A. BOP
B. BOT
C. Balance on Capital Account
D. Balance of Current Account
Answer: B. BOT
23. The convertibility of dollar was formally abandoned in —————
A. 1962
B. 1966
C. 1973
D. 1971
Answer: D. 1971
24. Soft loans to underdeveloped countries are disbursed by ———–
A. IDA
B. IBRD
C. GATT
D. ADB
Answer: A. IDA
25. IFC was established in —————-
A. 1958
B. 1956
C. 1954
D. 1950
Answer: B. 1956
26. GATT came into existence in —————-
A. 1947
B. 1946
C. 1948
D. 1950
Answer: C. 1948
27. SDRs scheme was initiated in ——————-
A. 1950’s
B. 1960’s
C. 1970’s
D. 1980’s
Answer: C. 1970’s
28. India is a member of ————-
A. ADB
B. IMF
C. IBRD
D. All the above
Answer: D. All the above
29. Regional member of the Asian Development Bank is
A. India
B. UK
C. Brazil
D. South Africa
Answer: A. India
30. GATT was changed to —————
A. WTO
B. IBRD
C. ADB
D. IMF
Answer: A. WTO
31. IMF started its functioning from
A. 1947
B. 1948
C. 1958
D. 1978
Answer: A. 1947
32. Which are known as Bretton Wood Twins?
A. IMF&IFC
B. IFC & IDA
C. IMF & IBRD
D. ADB & IDA
Answer: C. IMF & IBRD
33. The headquarter of world Bank is at ——————
A. Washington DC
B. Paris
C. Geneva
D. London
Answer: A. Washington DC
34. The equilibrium exchange rate is determined by —————
A. Demand for currencies
B. Supply of currencies
C. Demand and Supply of currencies
D. None of these
Answer: C. Demand and Supply of currencies
35. Determining the exchange rate at a higher level than prevailing in the foreign exchange market is known as ————
A. Pegging up
B. Pegging down
C. Undervaluation
D. None of these
Answer: A. Pegging up
36. FEMA is known as ————-
A. FEMA 1999
B. FEMA 2000
C. FEMA 2001
D. FEMA 1998
Answer: A. FEMA 1999
37. According to PPP theory the exchange rate between two currencies are determined by their ————
A. Relative price level
B. Relative interest level
C. Relative income level
D. None of these
Answer: A. Relative price level
38. In the exchange rate determination PPP theory considers ——–
A. Interest rates
B. Inflation rates
C. Spot transactions
D. None of these
Answer: B. Inflation rates
39. The rate at which one currency is exchanged for another is known as ————
A. Exchange options
B. Foreign exchange
C. Exchange rate
D. Futures
Answer: C. Exchange rate
40. The objective of IDA is
A. Increase production
B. Stability in exchange rate
C. Improve living conditions
D. Increase income
Answer: C. Improve living conditions
41. Smithsonian Agreement was signed in the year ———
A. 1970
B. 1972
C. 1973
D. 1971
Answer: D. 1971
42. The objective of IMF is
A. Reduce Inequality
B. Exchange rate stability
C. Reduce poverty
D. None of these
Answer: B. Exchange rate stability
43. SDRs are also known as ———–
A. Currency
B. Gold
C. Paper gold
D. None of these
Answer: C. Paper gold
44. IBRD was established in
A. 1940
B. 1943
C. 1944
D. 1945
Answer: D. 1945
45. The official decrease in the value of a currency is known as ———
A. Depreciation
B. Devaluation
C. Appreciation
D. None of these
Answer: B. Devaluation
46. Globalised economics prefer————
A. Fixed System
B. Pegging system
C. Flexible system
D. Bretton wood system
Answer: C. Flexible system
47. The European Union was formed in
A. 1950
B. 1951
C. 1952
D. 1953
Answer: C. 1952
48. Which is known as soft loan window of IBRD
A. MIGA
B. IFC
C. IMF
D. IDA
Answer: D. IDA
49. IFC was established in ————
A. 1953
B. 1954
C. 1955
D. 1956
Answer: D. 1956
50. Yen is the currency of ———-
A. China
B. Singapore
C. Malaysia
D. Japan
Answer: D. Japan
51. A deficit BOP exists, when —————–
A. Receipts> payments
B. Receipts< payments
C. Receipts= payments
D. None of these
Answer: B. Receipts< payments
52. IBRD is also known as —————
A. Asian Bank
B. Development Bank
C. World Bank
D. Investment Bank
Answer: C. World Bank
53. Bretton wood twins are ——————
A. IMF& world Bank
B. IMF & ADB
C. IBRD & IFC
D. IDA & IFC
Answer: C. IBRD & IFC
54. UNCTAD was constituted in ———–
A. 1961
B. 1962
C. 1963
D. 1964
Answer: D. 1964
55. WTO came into existence with a membership of ——————
A. 124
B. 125
C. 121
D. 120
Answer: B. 125
56. GATT was constituted in —————-
A. 1946
B. 1947
C. 1948
D. 1950
Answer: C. 1948
57. The Indian Currency code used in foreign exchange market is
A. INR
B. IDN
C. IND
D. IDA
Answer: A. INR
58. ————— takes into account only merchandize exports and imports
A. BOP
B. BOT
C. TOB
D. BTO
Answer: B. BOT
59. Which is known as paper gold
A. SRDs
B. SDRs
C. YEN
D. DOLLAR
Answer: B. SDRs
60. Increase in the value of a currency is known as ————–
A. Devaluation
B. Depreciation
C. Appreciation
D. None of these
Answer: C. Appreciation
61. Decrease in the value of a currency is known as ————-
A. Depreciation
B. Appreciation
C. Overvaluation
D. None of these
Answer: A. Depreciation
62. IMF created buffer stock financing facility in ———–
A. 1959
B. 1969
C. 1979
D. 1989
Answer: B. 1969
63. SDRs are popularly known as ——————
A. Gold
B. Paper gold
C. Paper money
D. None of these
Answer: B. Paper gold
64. IDA was established in ————-
A. 1960
B. 1950
C. 1970
D. 1955
Answer: A. 1960
65. The President of IBRD is the head of —————
A. ADB
B. IDA
C. EFTA
D. None of these
Answer: B. IDA
66. The membership of the IDA is open to all membership of ———–
A. ADB
B. IDBI
C. ICICI
D. IBRD
Answer: D. IBRD
67. Part I members of IDA are called ——————-
A. G24 members
B. G10 members
C. G20 members
D. None of these
Answer: A. G24 members
68. IFC was established in ————-
A. 1956
B. 1958
C. 1960
D. none
Answer: A. 1956
69. IDA loans are known as ————-
A. IDA window
B. IDA credits
C. IDA loans
D. None of these
Answer: B. IDA credits
70. IDA grants loans to those projects which are not financed by ——-
A. IMF
B. ADB
C. IBRD
D. ASEAN
Answer: C. IBRD
71. Which is the largest financial market in the world
A. International Capital Market
B. International financial market
C. Foreign exchange market
D. None of these
Answer: C. Foreign exchange market
72. FEMA is enacted by ———
A. Parliament of India
B. Supreme Court of India
C. RBI
D. None of these
Answer: A. Parliament of India
73. The currency of Austria
A. Euro
B. Dollar
C. Mark
D. Pound
Answer: A. Euro
74. Which monetary system is suitable for global economies
A. Fixed
B. Pegging
C. Flexible
D. None of these
Answer: C. Flexible
75. Smithsonian Agreement is for ———————–
A. Saving bretton wood system
B. Saving gold standard
C. Protect flexible system
D. None of these
Answer: A. Saving bretton wood system
76. ——————- system imposes a discipline an monetary authorities
A. Flexible
B. Fixed
C. Bretton wood
D. None of these
Answer: B. Fixed
77. Speculation is not possible in the case of ——— system
A. Flexible
B. Gold standard
C. Fixed
D. None of these
Answer: C. Fixed
78. Increased capital inflows increases ——————
A. Imports
B. Value of domestic currency
C. Value of foreign currency
D. None of these
Answer: B. Value of domestic currency
79. Political instability leads to ————- in the value of that country’s currency
A. Decrease
B. Stability
C. Increase
D. None of these
Answer: A. Decrease
80. ————– is a social factor that influence the exchange rate
A. War
B. Tourism
C. Changes in preferences
D. None of these
Answer: C. Changes in preferences
81. When exports increase, the supply of foreign currency ———–
A. Increases
B. Decrease
C. Remains constant
D. None of these
Answer: A. Increases
82. When imports increase, the supply of foreign currency ————-
A. Increase
B. Decrease
C. Remains constant
D. None of these
Answer: B. Decrease
83. Price index is considered in —————- theory of exchange rate determination
A. BOP theory
B. PPP theory
C. Mint Purity theory
D. None of these
Answer: B. PPP theory
84. Capital outflows leads to increase in the —————
A. Supply of foreign currencies
B. Demand for foreign currencies
C. Demand for domestic currency
D. None of these
Answer: B. Demand for foreign currencies
85. A deficit budget leads to —————-
A. Decrease in the value of domestic currency
B. Increase in the value of domestic currency
C. Stability in the exchange rate
D. None of these
Answer: A. Decrease in the value of domestic currency
86. Mint parity theory is suitable for ———
A. Gold standard
B. Paper standard
C. Flexible system
D. None of these
Answer: A. Gold standard
87. Forex reserves of a country are held by ———————
A. Commercial Banks
B. Central Banks
C. Investment Banks
D. None of these
Answer: B. Central Banks
88. Extending of economic activities across national boundaries is known as ————-
A. Liberalization
B. Privatization
C. Globalization
D. None of these
Answer: C. Globalization
89. The WTO is the successor to ————-
A. VAT
B. GATT
C. GTT
D. ATT
Answer: B. GATT
90. Central bank is likely to set policies and procedures to keep the exchange rate ——————
A. Down
B. Stable
C. Up
D. None of these
Answer: B. Stable
91. ————- of a country is the relation over a period between the values of her exports and the values of her imports
A. BOP
B. BOT
C. Budget
D. None of these
Answer: B. BOT
92. Devaluation raised the domestic price of ————–
A. Exports
B. Imports
C. Both exports and imports
D. None of these
Answer: B. Imports
93. Devaluation reduces the foreign price of ————–
A. Exports
B. Imports
C. Both exports and imports
D. None of these
Answer: A. Exports
94. Under gold standard the value of the currency unit was defined in terms of ————-
A. Currencies
B. Silver
C. Gold
D. None of these
Answer: C. Gold
95. The ADB was set up in the year
A. 976
B. 1967
C. 1965
D. 1966
Answer: D. 1966
96. The ADB is managed by ————-
A. Director General
B. Managing Director
C. President
D. None of these
Answer: C. President
97. Mahalanobis Strategy adopted in the ———–
A. 1st five year plan
B. 2ND five year plan
C. 3RD five year plan
D. 4TH five year plan
Answer: B. 2ND five year plan
98. EXIM Bank of India was established in —————
A. 1980
B. 1981
C. 1982
D. 1983
Answer: C. 1982
99. Euro is a ———-
A. Basket Currency
B. Paper Gold
C. Gold Currency
D. None of these
Answer: A. Basket Currency
100. The agreement, TRIPs and TRIMs are related to ————-
A. ADB
B. IBRD
C. WTO
D. None of these
Answer: C. WTO
101. The most popular currencies in the offshore market are ———–
A. Dollar and Yen
B. Dollar and Euro
C. Euro and Yen
D. Euro and Rupee
Answer: B. Dollar and Euro
102. The classical theory of international trade was developed by
A. Adam Smith
B. Marshall
C. Keynes
D. None of these
Answer: A. Adam Smith
103. Open economies are
A. Dependent
B. Independent
C. Stable
D. None of these
Answer: A. Dependent
104. The settlement of spot transactions takes place within
A. Tree days
B. One day
C. Two days
D. 4 days
Answer: C. Two days
105. The exchange rates in which the spot transactions are carried out are known as
A. Spot rate
B. ASK rate
C. Bid rate
D. Forward rate
Answer: A. Spot rate
106. Purchasing Power Purity Theory presents a line between exchange rates and ——–
A. Interest rate
B. Inflation
C. BOP
D. None of these
Answer: B. Inflation
107. Which is the invisible item in the BOP
A. Machinery
B. Tourist
C. Car
D. None of these
Answer: B. Tourist
108. Which is the world’s largest source of concession assistance
A. IFC
B. IMF
C. IBRD
D. IDA
Answer: D. IDA
109. MIGA was established in
A. 1978
B. 1988
C. 1998
D. 2008
Answer: B. 1988
110. Buffer stock financing was introduced by————
A. IMF
B. IFC
C. IDA
D. IBRD
Answer: A. IMF