CBSE Class 12 Economics Open Economy Macroeconomics MCQs Set 01

Question : Increase in the value of foreign commodities is known as _________
(a) Revaluation
(b) Devaluation
(c) Inflation
(d) None of these

Answer : B

Question : Measures to improve adverse balance of payment includes :
(a) Currency devaluation
(b) Import substitution
(c) Exchange control
(d) All of the above.

Answer : D

Question : When the import and export of visible items are equal, the situation is known as
(a) Balance of Trade
(b) Balance of Payment
(c) Trade Surplus
(d) Trade Deficit

Answer : A

Question :  Types of Foreign Exchange Market are:
(a) Spot market
(b) Forward market
(c) Both (a) and (b)
(d) None of these

Answer : C

Question : Foreign exchange is determined by:
(a) Demand for foreign currency
(b) Supply of foreign currency
(c) Demand and supply in the foreign exchange market
(d) None of the above

Answer : C

Question :  Hybrid in management of fixed and flexible exchange rate is known as ________
(a) Managed to float
(b) Crawling Peg
(c) Wider Bands
(d) None of these

Answer : A

Question : Balance of Trade means :
(a) Capital Transaction
(b) Import and export of goods
(c) Total debit and credit
(d) All the above

Answer : B

Question :  Which one is the visible item of Balance of Payments?
(a) Machine
(b) Cloth
(c) Cement
(d) All of these

Answer : D

Question :  Which among the following is a source of supply of foreign exchange?
(a) Donations given
(b) Imports
(c) Exports
(d) Gifts

Answer :  C

Question :  When there is a favourable balance of trade?
(a) X > M
(b) X = M
(c) X < M
(d) None of these

Answer : A

Question : Which one is the king of the exchange rate?
(a) Fixed Exchange Rate
(b) Flexible Exchange Rate
(c) Both (a) and (b)
(d) None of the above

Answer : C

Question : The records of exports and imports in goods and services and transfer payments is known as
(a) Current account
(b) Budget surplus
(c) Economic leakage
(d) degree of openness

Answer :  A

Question :  Which one is a merit of the fixed exchange rate?
(a) Promotes Foreign Trade
(b) Induces Foreign Capital
(c) Increases Capital Formation
(d) All the above

Answer : D

Question : If Rs 150 are required to buy $ 2, instead of Rs100 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) (d)

Answer : D

Question :  Which one is a demerit of the flexible exchange rate?
(a) Bad Results of Low Rate
(b) Uncertainty
(c) Instability in Foreign Exchange
(d) All the above

Answer : D

Question :  Which of the following is a merit of the fixed exchange rate?
(a) Ensures the supply of the fixed exchange rate
(b) Ensures the demand for the fixed exchange rate
(c) Ensures the stability for the fixed exchange rate
(d) None

Answer :  C

Question :  Which one is the item of Capital Account?
(a) Government Transaction
(b) Priva Transactions
(c) Foreign Direct Investment
(d) All the above

Answer : D

Question : The foreign exchange rate is determined by:
(a) Government
(b) Bargaining
(c) World Bank
(d) Demand and Supply forces

Answer : D

Question : The Gold Standard was prevalent in the world from:
(a) 15th century to 18th century
(b) 9th century to 18th century
(c) From 1870 till First World War
(d) From 1670 till First World War

Answer :  C

Question : Which one is a merit of fixed exchange rate ?
(a) Promotes Foreign Trade
(b) Induces Foreign Capital
(c) Increases Capital Formation
(d) All the above

Answer : D

Question : Foreign exchange transactions dependent on other foreign exchange transactions are called:
(a) Current account transactions
(b) Capital account transactions
(c) Autonomous transactions
(d) Accommodating transactions

Answer : D

Question : The operation of future delivery in the foreign exchange market is known as __
(a) Spot market
(b) Current market
(c) Forward market
(d) Domestic market

Answer :  C 

Question : Structure of balance of payment includes which account:
(a) Current account
(b) Capital account
(c) Both (a) and (b)
(d) None of these.

Answer : C

Question : Which account is included in the composition of Balance of Payments ?
(a) Current Account
(b) Capital Account
(c) Both (a) and (b)
(d) None of the above

Answer : C

Question :  The operation of daily nature in the foreign exchange market is known as
(a) Spot market
(b) Forward market
(c) Domestic market
(d) International market

Answer : A

Question : Other things remaining unchanged, when in a country the price of foreign currency rises, national income is:

(a) Likely to rise
(b) Likely to fall
(c) Likely to rise and fall both
(d) Not affected

Answer : A

Question : The forms of foreign exchange market is/are :
(a) Spot market
(b) Forward market
(c) Both (a) and (b)
(d) None of these

Answer : C

Question : The exchange rate at which demand for foreign currency becomes equal to its supply,is called:
(a) Equal rate of exchange;
(b) Unequal rate of exchange;
(c) Equilibrium rate;
(d) All of these

Answer : C

Question : Which one is a kind of fixed exchange rate?
(a) Gold Standard System of Exchange Rate
(b) Bretton Woods System of Exchange Rate
(c) Both (a) and (b)
(d) None of the above

Answer : C