General Economics 2 solved MCQs

1 of 8

1. Trade as an engine of growth was propounded by :

a. Hirschman

B. Nurkse

c. Marshall

d. Robinson

2. A decrease in the domestic currency price of foreign currency is:

a. Depreciation

B. Appreciation

c. Euro currency

d. Hedging

3. Normal rate quoted in foreign exchange market is:

a. Arbitrage

B. Balance of trade

c. Exchange rate

d. Price rate

4. Balance of payment consist of:

a. Trade in visible

B. Trade in invisibles

c. International capital flows

d. All of the above

5. Invisible item are the part of ‐‐‐‐‐‐ account of balance of payment.

a. Current

B. Capital

c. Merchandise

d. None of the above

6. Devaluation of currency may result in:

a. Increase in export

B. Increase in import

c. Increased capital flow

d. Capital outflow

7. Balance of payment take in to account:

a. Visible items

B. Invisible items

c. Both visible and invisible item

d. None of the above

8. A fall in the price of Rupee in terms of foreign exchange is termed as:

a. Depreciation

B. Appreciation

c. Devaluation

d. Revaluation

9. Transaction in travel, transportation and insurance between countries is included under:

a. Merchandise

B. Official reserves

c. Invisibles

d. None of the above

10. Which of the following transaction is debit in balance of payment;

a. Export of merchandise

B. Export of service

c. Gift from foreigners

d. Gift to foreigners

11. Which is the component of capital account of balance of payment:

a. Service payments

B. Portfolio investment

c. Export

d. Interest receipts

12. Under fixed exchange rate system, when domestic currency is moved to a higher parity in terms of vehicle currency is:

a. Appreciation

B. Depreciation

c. Devaluation

d. Revaluation

13. Which one of the following is correct when there is under valuation of domestic currency:

a. Encouraging exports and inflow of capital

B. Foreign goods cheaper and exports dearer

c. Country imports more and exports less

d. There is outflow of capital

14. In balance of payment , if current account registers a deficit, the capital and financial account must register a:

a. Deficit

B. Balance

c. Surplus

d. Capital outflow

15. In all balance of payment accounts, there are a fictitious head of account called:

a. Invisibles

B. Deficits

c. Reserves

d. Errors and omissions

16. Balance on merchandise and service trade is called:

a. Balance of payment

B. Trade balance

c. Current account

d. Balance on goods and services

17. When demand for US dollars increases under flexible exchange rate system, then:

a. The rupee depreciates

B. The dollar appreciates

c. Both A and B

d. None of the above

18. An economic transaction is entered in the balance of payment as a credit, if it leads to:

a. Receipt of payment from foreigners

B. Either the receipt of payment or making of payment

c. A payment to foreigners

d. Neither the receipt nor making of a payment

19. Remittances foe abroad is included in which account of balance of payment:

a. Current account

B. Capital account

c. Visible account

d. Official account

20. Assertion (A) : Devaluation in general is resorted to increase the exports. Reason (R) : It makes exports cheaper.

a. Both (A) and (R) are correct

B. (A) is correct, but (R) is not correct.

c. Both (A) and (R) are incorrect

d. A) is incorrect, but (R) is correct

21. The continuous deficit in the balance of payments of India is due to

a. Continued rise in imports

B. Slow rise in exports

c. Exchange rate volatility

d. All of the above

22. The ongoing weakening of Rupee against Dollar will cause

a. Indian exports to US will rise

B. Indian exports to US will fall

c. Import from US to India will remain constant

d. Indian exports to US remain constant

23. If the Rupees per Dollar($) exchange rate changes from Rs 44 to 46 in an year by the market force, it implies

a. Appreciation of $

B. Depreciation of $

c. Devaluation of $

d. Revaluation of $

24. Public finance is said to be:

a. Science of income and expenditure

B. Science of money and cost

c. Science of demand and supply of money.

d. Science of taxes and spending.

25. All the accounts of public authority are subject to:

a. Conceal

B. Audit and inspection

c. Publicity

d. None of above.

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