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WorksheetsForeign Exchange and BOp
Total questions: 70
Worksheet time: 35mins
The issue of the ________________ is controlled by RBI
Euro
USD
Rupee
Ringett
The issue of the ________________ is controlled by RBI
Euro
USD
Rupee
Ringett
How much of one country's money is worth compared to another country?
Exchange rate
Exchange control
Currency
Foreign trade
International trade free of government control and trade barriers
Trade barrier
Free trade
Tariff
Voluntary trade
An action a government uses to control trade between countries
Trade barrier
Voluntary trade
Free trade
None of the above
The government issues currency and coins to
Promote global trade
Control exchange of goods and services
Promote monopolies
Help make exchange of goods and services easier
India's foreign exchange system is
Free float
Fixed
Managed float
None
India is facing continuous deficit in BOP. In the foreign exchange market, rupee is expected to
Depreciate
Appreciate
No specific tendency
All of the above
The demand for domestic currency in the foreign exchange market is indicated by the following transactions in balance of payment
Export of goods and services
Import of goods and services.
Export of goods and services and capital inflows.
Import of goods and services and capital outflows.
Reduction of value of currency due to market forces
Revaluation
Devaluation
Depreciation
Appreciation
Difference in the value of exports and imports of only visible items are called
Balance of payment
Balance of trade
Balance of visible
Balance of invisible
Imbalance in the account of balance of payments is referred to as
Disequilibrium
Equilibrium
Equity
All of the above
Difference between the value of services exported and imported
Export trade
Visible trade
Invisible trade
Invincible trade
When credit items are more than debit items in foreign trade, BOP shows
Inflow of foreign exchange
Outflow of foreign exchange
Unilateral flow
Bilateral flow
FDI, FPI form part of
Current account
Capital account
Reserve account
Errors and omissions
If India imports more goods from China
India's BOP improves
China's BOP declines
India's BOP declines
All of the above
If Australia imports more goods from India
Australia's BOP improves
India's BOP improves
India's BOP declines
Both BoP improves
which of the following are not current account transactions
Imports payable
External commercial borrowings
Exports receivable
All of the above
B= Rf - Pf.
Name the components in this equation
BOP, Reserves, payments
BOT, Receipts, Payments
BOP, Receipts, Payments
BOT, Reserves, Prudence
In a floating exchange rate system, the increase in value of the currency is known as
(a)
Governments would need to maintain large amounts of foreign reserves to manage its currency in a (a) exchange rate system.
Money coming in a country is recorded as a (a) item on the Balance of Payments.
An export would be recorded as a credit item on the Balance of Trade in the (a) account, of the Balance of Payments
An MNC sending money back to its parent country would be recorded as a debit item on the (a) Income of the Current Account.
Charities received by a country would be a credit item on the (a) income of the Current Account.
A growth in MNCs in a country earning large sums of profit will possible cause Current Account (a) .
A country X is seeing a surplus of $ 20 million in its balance of trade, deficit 30 $million in net transfers and a surplus of $10 million in its net income. The current account is balanced.
Yes
No
What is Foreign Exchange Market?
a place where corporation and government can raise fund
a market for converting currency of one country into another country
trading of instrument by an exchange of securities
The purpose of the Forex market is to encourage international investment and trade.
False
True
In the foreign exchange market for the Mexican peso, which of the following would best describe the exchange rate for the peso?
a. The interest rate earned from saving pesos
b. The price of a peso in terms of some other currency
c. The price of a good in Mexico in terms of another goods in Mexico
d.The price of a peso in terms of pesos
Price in one country in relation to other currencies in the international exchange market is known as-
equilibrium rate
fixed exchange rate
exchange rate
flexible exchange rate
which is systematic record ofall the economic transactions between one country and rest of the world
Balance of trade
Balance of transactions
Budget
Balance of payments
which one of the following items is an intangible item in balance of payments statement?
Export of food grain
import of crude oil
banking services provided in other countries
import of steel by steel industry
current transaction are of which nature?
flow
stock
both a and b
none of above
Current account of BOP records transactions is related to
exchange of goods
exchange of service
unilateral transactions
all of above
Balance of trade is measuredas:
Dfference between import and export of goods
difference between import and export of services
Difference between import and export of capital
Difference betwee all import and all export
Balance of trade is Rs (-) 150crs and value of exports are Rs 350 crs.In this case value of imports will be
Rs 200crs
Rs 300crs
Rs 400 crs
Rs 500crs
Borrowing from abroad is recorded in BOT .true or false
True
False
which of the following is not a part of current account
Export of goods
Imports of services
Grants and gifts
FDI
Which of the following items are not a part ofcapital account?
loans
Banking capital transactions
Unilateral transactions
Portfolio investment
Which of the following items related to BOP on capital account?
Foreign investment
Loans
NRI remittances
All of these
Capital account may be
Private capital
Banking capital
official capital
all of them
which one of the following items are not the transactions of balance of trade
Export of jute
import of steel
Banking services providedin other countries
import of food items
if India export goods worth rs 20 crs and imports goods worth rs 30 crs.it will have a
surplus of rs10 crs in balance of trade
deficit of rs10 crs in balance of trade
deficit of rs50 crs in balance of trade
none of above
If BOT is showing the deficit of rs 200crs and value of exports is 700crs ,then the value of imports will be :
Rs200crs
Rs 500crs
Rs 700crs
Rs900crs
Foreign exchange transactions which are dependent of other foreign exchangetransactions are called :
Current account transactions
Capital account transactions
Autonomous transactions
Accommodating transactions
Accommodating transactions are
Balanceing in nature
Below the line
Both a and b
neither a nor b
which of the following is not a part of current account
Export of goods
Imports of services
Grants and gifts
FDI
Under which system Demand and supply for FOREX determines the exchange rate
Flexible exchange rate
Fixed exchange rate
Both
Managed floating system is
flexible system of exchange rate
mixture of fixed exchange rate and fixed exchange rate
A system managed by a foreign country
Depreciation is
Fall in the value of domestic currency in terms of foreign currency
Rise in the value of domestic currency in terms of foreign currency
none
Stability is a merit of
Fixed exchange rate system
Flexible exchange rate system
Both
Which of the following items will recorded on the Debit side of BOP? (You can tick more than one)
Loan from IMF to cover BOP deficit
Indian govt repays loan taken from IMF
Export of Jute to Sri Lanka
Purchase of toys from China
Autonomous items are also known as below the line items.
True
False
Inflow of Foreign exchange is recorded on which side of BOP
Debit
Credit
Both
None
Surplus in BOP arises when
Autonomous payments > Autonomous Receipts
Accommodating payments> accommodating receipts
accommodating receipts > accommodating payments
autonomous receipts > autonomous payments
Fixed exchange rate system is also known as
Pegged exchange rate system
Floating exchange rate system
Dirty Floating
Both (b) and (c)
The value of US 1$ has gone down from rs 67 to rs 65. it means that
Indian rupee has appreciated
US dollar has depreciated
Both (a) and (b)
none of these
Due to appreciation of domestic currency
Exports rise
Imports rise
Imports falls
None on the above
The decrease in the value of foreign exchange rate which is done intentionally by the government is called
Appreciation
Depreciation
Devaluation
Revaluation
Revaluation takes place under which system?
Flexible exchange rate system
Fixed exchange rate system
Managed floating exchange rate system
None of the above
The value of US Dollar $1 has fallen form Rs. 70 to Rs. 68. It means:
Currency is depreciated
Currency is appreciated
Both (a) and (b)
None of the above
The supply curve of foreign exchange rate is
Horizontal line parallel to x- axis
Vertical line parallel to y- axis
Slope downwards
Slope upwards
Due to decrease in demand of foreign currency, there is
Appreciation
Depreciation
Devaluation
Revaluation
Economic transactions include
Visible items
Invisible items
Unilateral transfers
All of the above
Import of machinery and equipment is recorded on which side of BOP account?
Credit side of current account
Debit side of current account
Debit side of capital account
Credit side of capital account
Borrowings from the rest of the world is recorded on which side of BOP account?
Credit side of current account
Debit side of current account
Debit side of capital account
Credit side of capital account
Which transactions are independent of state of BOP?
Autonomous
Accommodating
Compensatory
None of the above
Other things remaining the same, when in a country the market price of foreign currency falls, national income is likely:
To rise
To fall
To rise or to fall
To remain affected
