McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Economics (CBCS) .
Chapters
| 1. |
Which of the following items is not included in the invisible items of balance of payments? |
| A. | Shipping |
| B. | Insurance |
| C. | Export and import of goods |
| D. | None of the above |
| Answer» C. Export and import of goods | |
| 2. |
In balance of payments account, all goods exported and imported are recorded in |
| A. | Capital accounts |
| B. | Merchandise account |
| C. | Current account |
| D. | Savings account |
| Answer» C. Current account | |
| 3. |
If a country has fundamental deficit in in the balance of payments, it should resort to |
| A. | Exchange control |
| B. | Devaluation of its currency |
| C. | Inflation |
| D. | Loans |
| Answer» B. Devaluation of its currency | |
| 4. |
Capital account includes |
| A. | Invisible export |
| B. | Long-term capital transaction |
| C. | Invisible import |
| D. | All of the above |
| Answer» D. All of the above | |
| 5. |
Balance of trade includes |
| A. | Visible items |
| B. | Invisible items |
| C. | Both visible and invisible items |
| D. | None of the above |
| Answer» A. Visible items | |
| 6. |
A country which gives loans and grants on a large scale to other countries has |
| A. | A surplus in its BOP on capital account |
| B. | A deficit in its BOP on capital account |
| C. | A surplus in its BOP on current account |
| D. | A deficit in its BOP on its current account |
| Answer» B. A deficit in its BOP on capital account | |
| 7. |
‘twin deficits’ refer to revenue deficit and |
| A. | Capital deficit |
| B. | Capital account BoP deficit |
| C. | Current account BoP deficit |
| D. | None of the above |
| Answer» C. Current account BoP deficit | |
| 8. |
Measurement of deficit or surplus in the balance of payments in in international transaction is in a given year is |
| A. | Balance of payments |
| B. | Balance of trade |
| C. | Transfer payments to foreigners |
| D. | None of the above |
| Answer» A. Balance of payments | |
| 9. |
Overvaluation of domestic currency makes |
| A. | Foreign goods cheaper and exports dearer in foreign countries |
| B. | Foreign goods dearer and exports cheaper in foreign countries |
| C. | Domestic goods cheaper and foreign goods dearer |
| D. | None of the above |
| Answer» A. Foreign goods cheaper and exports dearer in foreign countries | |
| 10. |
Devaluation encourage |
| A. | Exports |
| B. | Imports |
| C. | Both exports and imports |
| D. | None of the above |
| Answer» A. Exports | |
| 11. |
A systematic record of receipts and payments in international transactions of a country in a given year is called |
| A. | Balance of trade |
| B. | Balance of payments |
| C. | Terms of trade |
| D. | Capital account |
| Answer» B. Balance of payments | |
| 12. |
The most important items in the current account are |
| A. | Foreign aid and pensions |
| B. | Private remittances and gifts |
| C. | Merchandise exports and imports |
| D. | Transportation and insurance |
| Answer» C. Merchandise exports and imports | |
| 13. |
Lending to foreign countries represents |
| A. | Capital inflows |
| B. | Capital outflows |
| C. | Services outflows |
| D. | Services inflows |
| Answer» B. Capital outflows | |
| 14. |
Payment to foreign country is a |
| A. | Credit transaction |
| B. | Debit transaction |
| C. | Internal transaction |
| D. | External transaction |
| Answer» B. Debit transaction | |
| 15. |
The category that do not includes in the balance of payments account is/are |
| A. | The current account |
| B. | The capital account |
| C. | The official settlements account |
| D. | The savings account |
| Answer» D. The savings account | |
| 16. |
The expression (X-M) denotes |
| A. | The balance of trade |
| B. | The balance of payments |
| C. | The domestic trade |
| D. | None of the above |
| Answer» A. The balance of trade | |
| 17. |
If the difference between exports and imports is zero |
| A. | Balance of trade balances |
| B. | Balance of payments balances |
| C. | Capital account equals current account |
| D. | None of the above |
| Answer» A. Balance of trade balances | |
| 18. |
The current account BOP deficit will be beneficial for the economy if foreign borrowings are used to finance |
| A. | Transportation |
| B. | Shipping goods |
| C. | Real investment |
| D. | Small and medium enterprises |
| Answer» C. Real investment | |
| 19. |
In the equation Y=C+I+G+(X-M), G denotes |
| A. | General expenditure |
| B. | Government expenditure |
| C. | Expenditure on gold |
| D. | Expenditure on goods |
| Answer» B. Government expenditure | |
| 20. |
If export is less than import, there is a ….. in balance of trade. |
| A. | Surplus |
| B. | Deficit |
| C. | Favourable |
| D. | Balance |
| Answer» B. Deficit | |
| 21. |
In the equation B=Rf-Pf, Pf represents |
| A. | Payments made by foreigners |
| B. | Payments made to foreigners |
| C. | Payments made to residents of a country |
| D. | Payments made to exporters |
| Answer» B. Payments made to foreigners | |
| 22. |
The difference between exports and imports of a country is its |
| A. | Balance of visible trade |
| B. | Balance of invisible trade |
| C. | Balance of payments |
| D. | None of the above |
| Answer» A. Balance of visible trade | |
| 23. |
Under direct control measures, the government aims at limiting |
| A. | The volume of imports |
| B. | The volume of exports |
| C. | Both imports and exports |
| D. | None of the above |
| Answer» A. The volume of imports | |
| 24. |
Given the foreign exchange rate and prices in a country, an increase in the value of exports causes an increase in |
| A. | Expenditures |
| B. | Incomes |
| C. | Investments |
| D. | Employment |
| Answer» B. Incomes | |
| 25. |
Devaluation results in |
| A. | Increase in domestic price of imports and decrease in foreign price of exports |
| B. | Increase in foreign price of exports and decrease in domestic price of imports |
| C. | Decrease in domestic price of imports and increase in foreign price of exports |
| D. | None of the above |
| Answer» A. Increase in domestic price of imports and decrease in foreign price of exports | |
| 26. |
Undervaluation of currency encourages |
| A. | Imports |
| B. | Exports |
| C. | Investments |
| D. | None of the above |
| Answer» B. Exports | |
| 27. |
The equation Rf-Pf <0 denotes |
| A. | Surplus in balance of payments |
| B. | Deficit in balance of payments |
| C. | Equilibrium in balance of payments |
| D. | None of the above |
| Answer» B. Deficit in balance of payments | |
| 28. |
Imports in balance of payments account are shown as a |
| A. | Negative item |
| B. | Positive item |
| C. | Invalid item |
| D. | None of the above |
| Answer» A. Negative item | |
| 29. |
Which of the following account does not included in the Reserve account? |
| A. | IMF |
| B. | SDR |
| C. | Reserve and monetary gold |
| D. | Savings |
| Answer» D. Savings | |
| 30. |
Exchange rate depreciation reduces |
| A. | The value of home currency in relation to foreign currency |
| B. | The value of foreign currency in relation to a home currency |
| C. | Both the values of home currency and foreign currency |
| D. | None of the above |
| Answer» A. The value of home currency in relation to foreign currency | |
| 31. |
By restricting imports through the quota system, the deficit is |
| A. | Reduce |
| B. | Increase |
| C. | Improve |
| D. | None of the above |
| Answer» A. Reduce | |
| 32. |
A deficit in BOP occurs when |
| A. | Credit>debit |
| B. | Credit<debit |
| C. | Credit=debit |
| D. | None of the above |
| Answer» B. Credit<debit | |
| 33. |
Fundamental disequilibrium is |
| A. | A short-term nature |
| B. | A medium-term nature |
| C. | A long-term nature |
| D. | None of the above |
| Answer» C. A long-term nature | |
| 34. |
Deflation as a measure of correcting deficit in BOP tends to make |
| A. | domestic goods relatively cheaper to foreign goods |
| B. | domestic goods relatively dearer to foreign goods |
| C. | foreign goods relatively cheaper to domestic goods |
| D. | foreign goods relatively dearer to domestic goods |
| Answer» A. domestic goods relatively cheaper to foreign goods | |
| 35. |
in 1991, India devalued its currency by 18 per cent to |
| A. | 19% |
| B. | 20% |
| C. | 21% |
| D. | 22% |
| Answer» B. 20% | |
| 36. |
When government imposed tariffs, it results in improvement of |
| A. | Balance of trade situation |
| B. | Balance of payments situation |
| C. | International transactions |
| D. | Domestic transactions |
| Answer» B. Balance of payments situation | |
| 37. |
Which of the following is not a type of disequilibrium in BOP? |
| A. | Temporary disequilibrium |
| B. | Fundamental disequilibrium |
| C. | Structural disequilibrium |
| D. | Constant disequilibrium |
| Answer» D. Constant disequilibrium | |
| 38. |
Invisible exports and imports are the component of |
| A. | Current account |
| B. | Capital account |
| C. | Savings account |
| D. | None of the above |
| Answer» A. Current account | |
| 39. |
Exports that are estimated on free on board (f.o.b.) basis signifies that |
| A. | the transportation costs, costs of insurance etc. are not included |
| B. | the transportation costs, costs of insurance etc. are included |
| C. | both (a) and (b |
| D. | none of the above |
| Answer» A. the transportation costs, costs of insurance etc. are not included | |
| 40. |
Imports that are estimated on carriage, insurance and freight (c.i.f.) basis signifies that |
| A. | the transportation costs, costs of insurance and freight get included. |
| B. | the transportation costs, costs of insurance and freight get excluded. |
| C. | Both (a) and (b |
| D. | None of the above |
| Answer» A. the transportation costs, costs of insurance and freight get included. | |
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