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WorksheetsEconomics
Total questions: 20
Worksheet time: 8mins
What does the BOP accounts record?
Transactions in goods, services and assets between residents of a country with the rest of the world during a fiscal year
Transactions in foreign exchange assets and liabilities during a fiscal year
Inflows and outflows of foreign exchange during a fiscal year
None of these
............. of balance of payments(BOP) is the record of trade in goods and services and transfer payments
Current Account
Capital Account
Which of the following is TRUE for transfer payments in the Current Account of BOP?
Transfer payments are the receipts which the residents of country get for free, without having to provide any goods and services in return
They consist of gifts, remittances and grants
They could be given by the government or by private citizen living abroad
All of these
Domestic demand for goods and demand for domestic goods are one and the same thing.
True
False
CAD (Current Account Deficit) means
The value of exports of goods and services is less than the value of imports of goods and services
The nation is a borrower from other countries
Both (a) and (b)
The nation is a lender to other countries
Which of the following is not a component of the current account of BOP?
Exports and imports of goods and services
Remittances given by private citizens living abroad
Net international income from compensation of employees
None of the above
Current Account Surplus (CAS) means
The value of exports of goods is more than the value of imports of goods
The nation is a lender to the rest of the world
Both (a) and (b)
The nation is a borrower from other countries
Which statement is incorrent
BOT is the difference between the value of exports and value of imports of goods of a country in a given period of time
Exports of goods is entered as a credit item in BOT whereas imports of goods is entered as a debit item in BOT
Trade surplus will arise if a country imports more goods than what it exports. Whereas, trade deficit will arise if the country exports more than it imports
Net invisibles is the difference between the value of exports and value of imports of services, transfers and flows of income of a country in a given period of time
(a) of Balance of Payments records all international transactions of assets
Capital Account of BOP records all international transactions of assets. Which of the following is not included in assets?
Money
Stock and Bonds
Machinery
Government debt
If an Indian buys a UK Car Company, it enters ______ of BOP as a ________ item.
Capital Account/ Debit
Current Account/Debit
Current Account/Credit
Capital Account/Credit
Which of the following is not included in the capital account of the Balance of Payments
Foreign Direct Invesments
Foreign Institutional Investments
External assistance
None of the above
Foreign Direct Investments include
Direct Investments e.g FDI, Equity Capital, Reinvestment earnings and other capital flows
Portfolio Investment, e.g. FII, off share funds
Both (a) and (b)
Neither (a) nor (b)
Which of the following is not recorded in the Capital Account of Balance of Payments?
Equity capital
Gifts, remittances and Grants
Government Aid
Offshore Funds
Which of the following is recorded in the capital account of BOP
Reinvested Earnings
Inter-governmental multilateral and bilateral loans
Short term debt
All of these
It is difficult to record all international transactions accurately. Thus a third element of Bop (apart from the current and capital accounts), called Errors and Omissions reflects this.
True
False
An increase in foreign income improves the trade balance
True
False
(a) is the sum of the balance of merchandise trade, services and net transfers received from the rest of the world
Which statement is incorrect?
interest on loan received from Nepal is recorded on the credit side of the current account of BOP
A company located in India receives a loan from a company located abroad.. This transaction will be recorded in credit side of Capital account of BOP
Profit received from investments abroad is recorded in capital account
FDI is not the component of current account of BOP
Difference between value of exports and imports of goods and services is called trade balance.
True
False
