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