Q1: Which of the following is international trade?
- A. Trade between provinces
- B. Trade between regions
- C. Trade between countries
- D. (b) and (c) of above
Answer
Answer C. Trade between countries
Q2: Which is NOT an advantage of international trade
- A. Export of surplus production
- B. Import of defence material
- C. Dependence on foreign countries
- D. Availability of cheap raw materials
Answer
Answer C. Dependence on foreign countries
Q3: A tariff
- A. Increases the volume of trade
- B. Reduces the volume of trade
- C. Has no effect on volume of trade
- D. (a) and (c) of above
Answer
Answer B. Reduces the volume of trade
Q4: Two countries can gain from foreign trade if
- A. Cost ratios are different
- B. Tariff rates are different
- C. Price ratios are different
- D. (a) and (c) of above
Answer
Answer D. (a) and (c) of above
Q5: Terms of trade of developing countries are generally unfavourable because
- A. They export primary goods
- B. They import value added goods
- C. They export few goods
- D. (a) and (b) of above
Answer
Answer D. (a) and (b) of above
Q6: Term of trade of a country show
- A. Ratio of goods exported and imported
- B. Ratio of import duties
- C. Ratio of prices of exports and imports
- D. (a) and (c) of above
Answer
Answer C. Ratio of prices of exports and imports
Q7: Terms of trade” between two countries refer to a ratio of
- A. Export prices to import prices
- B. Currency values
- C. Exports to imports
- D. Balance of trade to balance of payments
Answer
Answer A. Export prices to import prices
Q8: Terms of trade of a country
- A. Mean the trade agreement between trading countries
- B. Is another name of exchange ratio of two currencies
- C. Show the ratio between total export earnings and import bill of a country
- D. Are determined by the price index of export and import goods
Answer
Answer D. Are determined by the price index of export and import goods
Q9: Pakistan’s terms of trade
- A. Have risen over past few years
- B. Have fallen over past few years
- C. Always remain above 100
- D. Are determined by federal govt
Answer
Answer B. Have fallen over past few years
Q10: Exchange value of Pak rupee against other currencies has fallen because
- A. Our total exports are smaller
- B. Our imports are more than exports
- C. Exports are more than imports
- D. Pakistan does not produce gold
Answer
Answer B. Our imports are more than exports
Q11: This is an advantage of foreign trade
- A. We can preserve our natural resources
- B. New technology comes to the country
- C. People need not go abroad
- D. We can get foreign currencies
Answer
Answer B. New technology comes to the country
Q12: David Ricardo presented the theory of international trade called
- A. Theory of absolute advantage
- B. Theory of comparative advantage
- C. Theory of equal advantage
- D. Theory of total advantage
Answer
Answer B. Theory of comparative advantage
Q13: Trade between two countries takes place when
- A. Cost ratios of commodities are equal
- B. Cost ratios of commodities are different
- C. Cost ratios of commodities are high
- D. Cost ratios of commodities are low
Answer
Answer B. Cost ratios of commodities are different
Q14: The theory explaining trade between two countries is called
- A. Comparative disadvantage theory
- B. Comparative cost theory
- C. Comparative trade theory
- D. None of the above
Answer
Answer B. Comparative cost theory
Q15: In foreign trade, Protection policy means
- A. Restrictions on exports
- B. Restriction on transfer of foreign exchange
- C. Restrictions on imports
- D. All of the above
Answer
Answer C. Restrictions on imports
Q16: Foreign trade has the advantage
- A. Trading countries get foreign exchange
- B. Can import scarce raw materials
- C. Can import machinery and technology
- D. (b) and (c) of above
Answer
Answer D. (b) and (c) of above
Q17: This is NOT an advantage of foreign trade
- A. We can get gold from abroad
- B. New technology comes to the country
- C. We can import goods which are in short supply in Pakistan
- D. We can made best use of natural resources
Answer
Answer A. We can get gold from abroad
Q18: Benefit of Foreign trade
- A. Benefits developed countries
- B. Benefits underdeveloped countries
- C. Benefits democratic countries
- D. Benefits all countries
Answer
Answer D. Benefits all countries
Q19: Which of the following theories suggests that firms seek to penetrate new markets over time?
- A. Imperfect Market Theory
- B. Product cycle theory
- C. Theory of Comparative Advantage
- D. None of the above
Answer
Answer B. Product cycle theory
Q20: Underlying the application of the monopolistic competition model to trade is the idea that trade
- A. increases market size
- B. allows companies to charge higher price
- C. increases consumer choices
- D. decreases the number of firms in an industry
Answer
Answer A. increases market size
Q21: Since 1980s which of the following changes has happened in the world trade?
- A. Share of “north-north” trade has decreased in total merchandise exports
- B. Share of “south-south” trade has increased in total merchandise eports
- C. share of agriculture produce has decreased in total merchandise exports
- D. all of the above
Answer
Answer D. all of the above
Q22: In a quote exchange rate, currency that is to be purchase with another currency is called
- A. liquid currency
- B. foreign currency
- C. local currency
- D. base currency
Answer
Answer D. base currency
Q23: Holding an inventory have
- A. buying cost
- B. selling cost
- C. opportunity cost
- D. exchange rate risk
Answer
Answer C. opportunity cost
Q24: Today, important factor that result in augmentation in international bond market is
- A. low interest rates
- B. high interest rates
- C. moderate interest rates
- D. all of above
Answer
Answer A. low interest rates
Q25: In the following quote: Spot USD 1 = Rs.45.6500/650 Spot September 100/150 September forward buying rate for dollar is
- A. Rs.45.6800
- B. Rs.45.6600
- C. Rs.45.7500
- D. Rs.45.6500
Answer
Answer B. Rs.45.6600
Q26: The transaction where the exchange of currencies takes place two days after the date of the contract is known as
- A. ready transaction
- B. value today
- C. spot transactions
- D. value tomorrow
Answer
Answer C. spot transactions
Q27: The transaction where the exchange of currencies takes place on the same date is known as
- A. tom
- B. ready transaction
- C. spot transactions
- D. value tomorrow
Answer
Answer B. ready transaction
Q28: A Transaction in which the currencies to be exchanged the next day of the transaction is known as
- A. ready transaction
- B. value today
- C. spot transactions
- D. Value tomorrow
Answer
Answer D. Value tomorrow
Q29: The transaction in which the exchange of currencies takes place at a specified future date, subsequent to the spot date is known as a
- A. swap transaction
- B. forward transaction
- C. future transaction
- D. non-deliverable forwards
Answer
Answer B. forward transaction
Q30: One-month forward contract entered into on 22nd March will fall due on
- A. 21th April
- B. 22nd April
- C. 23rd April
- D. 24th April
Answer
Answer D. 24th April
Q31: Which of the following statements is true?
- A. Exchange exposure leads to exchange risk
- B. exchange risk leads to exchange exposure
- C. exchange exposure and exchange risk are unrelated
- D. none of the above
Answer
Answer A. Exchange exposure leads to exchange risk
Q32: A currency future is not
- A. traded on futures exchanges
- B. a special type of forward contract
- C. of standard size
- D. available in India
Answer
Answer D. available in India
Q33: Normally forward purchase contract booked should be used by the customer
- A. for executing the export order for which the contract was booked
- B. for any export order from the same buyer
- C. for any export order for the same commodity
- D. for any export order
Answer
Answer A. for executing the export order for which the contract was booked
Q34: The bank should verify the letter of credit/sale contract for booking a
- A. Forward sale contract
- B. Forward purchase contract
- C. Cancelling a forward contract
- D. None of the above
Answer
Answer B. Forward purchase contract
Q35: Under the forward exchange contract
- A. the exchange rate is determined on the future date
- B. the parties agree to meet at a future date for finalisation
- C. delivery of foreign exchange is done on a predetermined future date
- D. none of the above
Answer
Answer C. delivery of foreign exchange is done on a predetermined future date
Q36: The term risk in business refers to
- A. chance of losing business
- B. chance of making losses
- C. uncertainty associated with expected event leading to losses or gains
- D. threat from competitors
Answer
Answer C. uncertainty associated with expected event leading to losses or gains
Q37: Derivatives can be used by an exporter for managing
- A. currency risk
- B. cargo risk
- C. credit risk
- D. all the above
Answer
Answer A. currency risk
Q38: Indirect quotation is also known as
- A. home currency quotation
- B. foreign currency quotation
- C. European quotation
- D. American quotation
Answer
Answer B. foreign currency quotation
Q39: In indirect quotation the principle adopted by the bank is to
- A. buy low only
- B. buy low; sell high
- C. buy high; sell low
- D. sell low only
Answer
Answer C. buy high; sell low
Q40: In direct quotation the principle adopted by the bank is to
- A. buy low only
- B. buy low; sell high
- C. buy high; sell low
- D. sell low only
Answer
Answer B. buy low; sell high
