CBSE Class 12 Economics Exchange Rate and Balance Of Payments MCQs

Question :  The exchange rate at which demand for foreign currency becomes equal to its supply called

a) Equal rate of exchange

b) Unequal rate of exchange 

c) Equilibrium rate

d) All of these

Answer :  Equilibrium rate

Question :  According to adjustable peg system (or Bretton Woods System ) of Exchange Rate :

a) Different currencies were pegged to one currency (US dollar)

b) US dollar was assigned gold value at a fixed price

c) Parity between two currencies was determined by the quantity of gold contained in them

d) All of these

Answer :  All of these

Question :  What is the relationship between demand for foreign exchange and exchange rate ?

a) Inverse          

b) Direct

c) One to one

d) No to relationship

Answer :  Inverse          

Question :  What is the relationship between supply of foreign exchange and exchange rate?

a) Inverse     

b) Direct

c) One to one

d) No to relationship

Answer :  Direct

Question :  Spot market is that market where in :

a) Only spot or current transactions are handled

b) Foreign exchange transactions are meant for future delivery

c) Exchange rate is determined instantly

d) Both (a) and (c)

Answer :  Both (a) and (c)

Question :  Forward market is that market which :

a) Handled transactions of foreign exchange meant for future delivery

b) Handled current transactions

c) Handled current as well as future transactions

d) None of these

Answer :  Handled transactions of foreign exchange meant for future delivery

Question :  If Rs. 150 ate required to buy $ 2, instead of Rs.100 earlier, then :

a) Domestic currency has depreciated 

b) Domestic currency has appreciated

c) Rupee value of import bill will increase 

d) Both (a) and (c)

Answer :  Both (a) and (c)

Question :  BoP is measured as :

a) Difference between visible items of exports and imports

b) Difference between invisible items of exports and imports

c) Difference between external and internal flow of gold

d) Difference between all receipts of foreign exchange and payments of foreign exchange

Answer :  Difference between all receipts of foreign exchange and payments of foreign exchange

Question :  Balance of trade is measured as : 

a) Difference between import and export goods

b) Difference between import and export services

c) Difference between import and export of capital

d) Difference between all export and all imports

Answer :  Difference between import and export goods

Question :  In which of the following categories are economic transactions of balance of trade recorded ?

a) Visible items 

b) Invisible items

c) Capital transfers 

d) All the above

Answer :  Visible items 

Question :  Which of the following transactions are recorded in the current account of the balance of payments ?

a) Import and export of goods and services  

b) Transfers from one country to the other

c) Both (a) and (b) 

d) None of these

Answer :  Both (a) and (b) 

Question :  Which of the following items relate to BoP which :

a) Foreign investment 

b) Loans

c) NRI remittance

d) All of these

Answer :  All of these

Question :  Autonomous items are related to those transactions which :

a) Are determined by motive of profit 

b) Are not concerned with the equilibrium status of BoP

c) Both (a) and (b)

d) None of these

Answer :  Both (a) and (b)

Question :  Accommodating items are those items of Bop which :

a) Are not determined by profit motive 

b) Are conditioned by the positive or negative BoP status

c) Deal with capital transfers only

d) Both (a) and (b)

Answer :  Both (a) and (b)

Question : Disequilibrium in balance of payments means:

a) Surplus balance of payments 

b) Deficit balance of payments

c) Both (a) and (b) 

d) None of these

Answer :  Both (a) and (b) 

Question :  If balance of trade is (-) Rs.600 crore and value of exports is rs.500 crore then the value of imports will be :

a) Rs.1,300 crore  

b) Rs. 300 crore

c) Rs.1,100 crore 

d) Rs. 1,200 crore

Answer :  Rs.1,100 crore