Chapter: Foreign Trade and Balance of Payment
1.

____ is a systematic record of all the economic transaction between one country and rest of the would:

A. Balance of Trade
B. Balance of Transaction
C. Budget
D. Balance of payments
Answer» D. Balance of payments
2.

As per IMF balance of payment manual, import export of goods should be presented on:

A. FOB basis
B. FOR basis
C. CIF basis
D. All of these
Answer» A. FOB basis
3.

OECD stands for:

A. Organization for export co-operation & development
B. Organization for economic commission & development
C. Organization for export commission & development
D. Organization for economic co-operation & development
Answer» D. Organization for economic co-operation & development
4.

India has witnessed a surplus for the third successive year in which account of the balance of payment?

A. Trade account of BOP
B. Current account of BOP
C. Both (a) and (b)
D. None of these
Answer» B. Current account of BOP
5.

In India which authority takes the purview of import & export:

A. EXIM
B. RBI
C. Ministry of Finance
D. Ministry of commerce
Answer» D. Ministry of commerce
6.

Devaluation means:

A. To reduce the value of home currency in other currency
B. To appreciate the value of home currency
C. To increase the value of home currency in other currency.
D. To constant the value of home currency.
Answer» A. To reduce the value of home currency in other currency
7.

_______ is a systematic record of all transactions of a country in a year.

A. Balance of payment
B. Balance of Trade
C. Current Account of Balance of Payment
D. None.
Answer» A. Balance of payment
8.

The current account of Balance of Payment includes trade balance and _______.

A. Settlement account
B. Capital account
C. Invisibles
D. Errors and omissions.
Answer» C. Invisibles
9.

Balance of payment deficit can be removed through:

A. Devaluation of currency
B. Vigorous export promotion
C. Import substitution
D. All of the above.
Answer» A. Devaluation of currency
10.

The difference between the value of a nations visible exports and visible import is.

A. Balance of trade.
B. Balance of payments.
C. Balance of current Account.
D. Balance of Capital Account.
Answer» A. Balance of trade.
11.

Which of the following is NOT a restriction to international trade?

A. Quotas.
B. GATT.
C. Subsidies.
D. Exchange controls.
Answer» B. GATT.
12.

FDI stands for:

A. foreign direct investment.
B. foreign domestic investment.
C. foreign direct intervention.
D. foreign direct intermediation
Answer» A. foreign direct investment.
13.

The balance of payments of a country records flows of money from:

A. imports and exports and investment flows.
B. imports and exports and investments flow and speculative flows.
C. imports and exports.
D. imports and exports and domestic demand.
Answer» B. imports and exports and investments flow and speculative flows.
14.

Trade between two countries can be useful if cost ratios of goods are:

A. Undetermined
B. Decreasing
C. Equal
D. Different
Answer» D. Different
15.

The term Euro Currency market refers to

A. The international foreign exchange market
B. The market where the borrowing and lending of currencies take place outside the country of issue
C. The countries which have adopted Euro as their currency
D. The market in which Euro is exchanged for other currencies
Answer» B. The market where the borrowing and lending of currencies take place outside the country of issue
16.

Which of the following theories suggests that firms seek to penetrate new markets over time?

A. Imperfect Market Theory
B. Product cycle theory
C. Theory of Comparative Advantage
D. None of the above
Answer» B. Product cycle theory
17.

Dumping refers to:

A. Reducing tariffs
B. Sale of goods abroad at low a price, below their cost and price in home market
C. Buying goods at low prices abroad and selling at higher prices locally
D. Expensive goods selling for low prices
Answer» B. Sale of goods abroad at low a price, below their cost and price in home market
18.

International trade and domestic trade differ because of:

A. Different government policies
B. Immobility of factors
C. Trade restrictions
D. All of the above
Answer» D. All of the above
19.

The margin for a currency future should be maintained with the clearing house by

A. The seller
B. The buyer
C. Either the buyer or the seller as per the agreement between them
D. Both the buyer and the seller
Answer» D. Both the buyer and the seller
20.

The following statement with respect to currency option is wrong

A. Foreign currency- Rupee option is available in India
B. An American option can be executed on any day during its currency
C. Put option gives the buyer the right to sell the foreign currency
D. Call option will be used by exporters
Answer» D. Call option will be used by exporters
21.

Govt. policy about exports and imports is called:

A. Commercial policy
B. Fiscal policy
C. Monetary policy
D. Finance policy
Answer» A. Commercial policy
22.

Which of the following is international trade?

A. Trade between countries
B. Trade between regions
C. Trade between provinces
D. Both (b) and (c)
Answer» A. Trade between countries
23.

Market in which currencies buy and sell and their prices settle on is called the

A. International bond market International capital market
B. Foreign exchange market
C. Eurocurrency market
D. none
Answer» C. Eurocurrency market
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