Commerce Notes for Assistant Professor Exam






TRB Commerce Unit 1 – Business Environment & International Business (Notes + Clear MCQs)

Commerce – Unit 1: Business Environment & International Business

NOTES

1) Business Environment – Elements

  • Economic: systems (capitalist/mixed), fiscal & monetary policy, inflation, interest, GDP.
  • Political & Legal: role of government, regulation/deregulation, Consumer Protection Act, FEMA, CSR.
  • Socio-cultural: demographics, education, values, tech adoption.

2) International Business – Scope

  • Drivers: market seeking, resource seeking, efficiency & strategic assets.
  • Entry modes: export, licensing, franchising, JV, wholly-owned subsidiary.

3) Trade Theories & Policy

  • Absolute & Comparative Advantage; Heckscher-Ohlin (factor endowments).
  • Tariffs vs. Non-tariff barriers (quotas, standards, subsidies).
  • India’s trade policy: export promotion, FTAs, SEZs.

4) FDI & FPI

  • FDI = lasting control (≥10% equity, management influence); FPI = portfolio stakes without control.
  • Host/Home benefits: capital, tech, jobs vs. profit repatriation, crowding-out concerns.

5) Balance of Payments (BOP)

  • Current account (goods/services/income/transfers) & Capital/Financial account.
  • Deficit financing: reserves use, exchange rate, capital inflows.

6) Regional Integration

  • Levels: FTA → Customs Union → Common Market → Economic Union → Political Union.
  • Examples: EU, ASEAN, SAARC, NAFTA/USMCA.

7) Institutions & WTO

  • IMF (stability & BoP support), World Bank (development lending), UNCTAD (trade & development).
  • WTO: MFN, National Treatment; Agreements—GATT, GATS, TRIPS, AoA; Dispute Settlement.

MCQs – 24 Questions

1) Which policy primarily targets inflation control in the short run?
  1. Fiscal policy
  2. Monetary policy
  3. Industrial policy
  4. Trade policy
Answer: B. Interest rate & liquidity tools.
2) FEMA in India mainly governs:
  1. Competition law
  2. Foreign exchange transactions
  3. Insolvency resolution
  4. Consumer protection
Answer: B.
3) A non-tariff barrier example is:
  1. Ad-valorem duty
  2. Quota
  3. Countervailing duty
  4. Export tax
Answer: B.
4) Comparative advantage arises due to:
  1. Absolute productivity only
  2. Relative opportunity costs
  3. Monopoly power
  4. Price controls
Answer: B.
5) FDI vs. FPI—FDI typically implies:
  1. Short-term speculative holding
  2. Control/management influence
  3. No technology transfer
  4. Government ownership only
Answer: B.
6) In BOP, remittances from abroad appear in:
  1. Capital account
  2. Errors & omissions
  3. Current account—transfers
  4. Financial derivatives
Answer: C.
7) Which is a feature of a Customs Union?
  1. Common currency
  2. Common external tariff
  3. Free movement of labour & capital
  4. Political integration
Answer: B.
8) “MFN” under WTO means:
  1. Preferential duty for neighbours
  2. Grant the best tariff to one partner
  3. Treat all members no worse than the best treated
  4. Ban on tariffs
Answer: C.
9) Under GATS, commitments relate to:
  1. Goods only
  2. Services sectors & modes of supply
  3. IPR protection
  4. Agriculture only
Answer: B.
10) A rise in policy rates by the central bank tends to:
  1. Increase money supply
  2. Reduce credit growth
  3. Raise fiscal deficit
  4. Lower exchange rate volatility
Answer: B.
11) EOUs/SEZs are instruments mainly for:
  1. Import substitution
  2. Export promotion
  3. Price controls
  4. Capital account convertibility
Answer: B.
12) The Heckscher-Ohlin model explains trade via:
  1. Scale economies alone
  2. Factor endowment differences
  3. Exchange rate movements
  4. Cartel behaviour
Answer: B.
13) Which is not a mode of FDI entry?
  1. Wholly-owned subsidiary
  2. Greenfield investment
  3. Licensing without equity
  4. Joint venture
Answer: C. Pure licensing is non-equity.
14) A persistent current-account deficit may be financed by:
  1. Export receipts
  2. FDI/FPI inflows or reserve drawdown
  3. Tariff hikes only
  4. Budget surplus
Answer: B.
15) CSR legally applies in India above thresholds per:
  1. FEMA
  2. Companies Act, 2013
  3. SEBI Takeover Code
  4. Competition Act
Answer: B.
16) TRIPS mainly covers:
  1. Agricultural subsidies
  2. Intellectual property rights
  3. Services trade
  4. Balance of payments safeguards
Answer: B.
17) Devaluation (fixed regime) typically:
  1. Makes exports cheaper
  2. Makes imports cheaper
  3. Reduces competitiveness
  4. Raises domestic interest rates directly
Answer: A.
18) The World Bank’s IBRD focuses on:
  1. Short-term balance support
  2. Long-term development loans
  3. Exchange rate surveillance
  4. Global food aid
Answer: B.
19) National Treatment in WTO requires:
  1. Foreign goods taxed higher
  2. Foreign and domestic like products treated equally post-entry
  3. Quota free trade
  4. Zero tariffs
Answer: B.
20) Trade creation is most likely after forming a(n):
  1. Free Trade Area
  2. Autarky
  3. Import substitution club
  4. None of these
Answer: A.
21) A sovereign wealth fund buying minority stakes abroad is:
  1. FDI
  2. FPI
  3. ODA
  4. OFDI
Answer: B. Portfolio investment.
22) Under GATT, agriculture is addressed via:
  1. AoA
  2. TRIMS
  3. GATS
  4. TRIPS
Answer: A. Agreement on Agriculture.
23) UNCTAD’s core mandate is:
  1. Monetary policy
  2. Trade & development, investment, technology issues
  3. Global policing
  4. Bank regulation
Answer: B.
24) Which is not a non-tariff measure?
  1. Sanitary/phyto-sanitary standard
  2. Technical regulation
  3. Specific customs duty
  4. Voluntary export restraint
Answer: C. A tariff, not NTM.
Key (1–24): B,B,B,B,B,C,B,C,B,B,B,B,C,B,B,B,A,B,B,A,B,A,B,C

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