Govt. Budget, Balance of payment and Foreign exchange

Appreciation of domestic currency occurs when the value of domestic currency.........in relation to the value of foreign currency.

• (a) Increases

• (b) remains constant

• (c) Decreases

• (d) All of these.

Two friends Asha and Radha were discussing the exchange rate system. 1 “Under This system the exchange rate are determined by the market forces of demand and supply. However, deliberate efforts are made by the competent authority to keep the exchange rates within the specific range.‟ The above-mentioned statements are given by Radha. Identify the type of exchange rate system was she talking about.

• (a) Fixed exchange rate

• (b) Floating exchange rate

• (c) Managed floating exchange rate

• (d) None

Read the following statements- Assertion (A) and Reason ®. Choose one of the correct alternatives given below:

Assertion (A): The rate at which current transaction in foreign exchange take place is called spot rate.

Reason ®: Forward rate is the rate at which forward transactions take place in the foreign exchange market.

• (a) Both Assertion(A) and Reason ® are true Reason ®is the correct explaination of assertion (A).

• (b) Both Assertion (A)and Reason ®are true and Reason R is not the correct explaination of assertion (A).

• ( c ) Assertion (A)is true but Reason ® is false

• (d) Assertion (A) is false. but Reason ®is true.

Read the following statements-

Assertion (A) and Reason ®. Choose one of the correct alternatives given below:

Assertion (A): Flexible exchange rate is also known as floating or free exchange rate.

Reason ® : Flexible exchange rate is determined by the market forces of demand and supply of foreign exchange without government intervention.

• (a) Both Assertion (A) and Reason ® are true Reason ® is the correct explanation of assertion (A).

• (b) Both Assertion (A) and Reason ® are true and Reason R is not the

• ( c) Assertion (A)is true but Reason ® is false.

• (d) Assertion (A) is false. but Reason ® is true.

Read the following statements and choose the correct alternative :

Statement 1 : Depreciation is the fall in the value of domestic currency against foreign currency.

Statement 2 : Depreciation occurs under the floating exchange rate system.

• (a) Both the statements are correct.

• (b) Both the statements are incorrect

• (c) Statement 1 is correct statement 2 is incorrect.

• (d) Statement 2 is correct and statement 1 is incorrect.

“As per the National Stock Exchange (NSE) data, dated 9th June, 2023, there was a net selling off worth ₹ 309 crore by Foreign Institutional Investors (FIIs) over the period of one month i.e., 9th May, 2023 - 9 th June, 2023.” The above-mentioned transactions will be recorded on __________ side of account of Balance of Payments of India. (Choose the correct alternative to fill in the blanks)

• Debit, current

• Credit, capital

• Credit, current

• Debit, Capital

Which one of these is NOT a capital expenditure:

• a. Construction of a new railway line

• b. Repayment of old loan by the government.

• c. Salary and allowances of MPs and MLAs

• d. Construction of a government hospital building

Read the following statement-I and statement-II carefully and choose the correct alternatives from the followings-

Statement-I: Revenue budget impact asset-liability status of the government.

Statement-II: High capital receipts are often related to compulsions of borrowings.

• a. Statement-I is true and Statement-II is false.

• b. Statement-II is true and Statement-I is false.

• c. Both Statements are true

• d. Both Statements are false.

The economic assistance given to the firms and households by the government with a motive of general welfare is called ________

• a. Taxes

• b. Rent

• c. Subsidies

• d. Remittances.

Which of the following is an example of indirect tax?

• Income Tax

• GST

• Corporation tax

• None of these