CBSE Class 12 Economics Open Economy Macroeconomics MCQs Set C

Question: What is the relationship between demand for foreign exchange and exchange rate?
a) Inverse
b) Direct
c) One to one
d) No relationship
Answer: a

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: d

Question: Forward market is that market which:
a) Handles transactions of foreign exchange meant for future delivery
b) Handles current transactions
c) Handles current as well as future transactions
d) None of these
Answer: a

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: d

Question: Balance of trade is measured as:
a) Difference between import and export of goods
b) Difference between import and export of services
c) Difference between import and export of capital
d) Difference between all imports and all exports
Answer: a

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: Spot market is that market where:
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: d

Question: Cause of BoP imbalance relates to:
a) Autonomous items
b) Accommodating items
c) Both (a) and (b)
d) Neither (a) nor (b)
Answer: a

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: c

Question: According to the adjustable peg system (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: d

Question: What is the relationship between supply of foreign exchange and exchange rate?
a) Inverse
b) Direct
c) One to one
d) No relationship
Answer: b

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: a

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: c

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: c

Question: If Rs.150 are 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: a

Question: Which of the following items relate to BoP?
a) Foreign investment
b) Loans
c) NRI remittance
d) All of these
Answer: d

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: c

Fil lIn The Blanks

Question: BoP surplus leads to an/a ________in official reserves. (increase/decrease)
Answer: Increase

Question:___________= Compensation of employees + Investment income.(Factor income /Transfer income)
Answer: Factor income

True/ False

Question: Financial transactions relate to international sale and purchase of real assets.(true/false)
Answer: False

Question: Current account records all payments to rest of the world as debit.(True/False)
Answer: True