WorksheetsCurrent Account MCQs
Total questions: 50
Worksheet time: 25mins
The current account records transactions related to:
Capital flows
Goods, services, income, and transfers
Foreign direct investment
Gold reserves
The balance of payments consists of:
Only the current account
Only the capital account
Current, capital, and financial accounts
Only trade in goods
The current account includes:
Imports and exports of goods and services
Investment flows
Borrowing and lending
Central bank reserves
A current account surplus occurs when:
Imports exceed exports
Exports exceed imports
Government spending is high
Savings are low
The main components of the current account are:
Trade in goods, trade in services, income, and transfers
Goods and capital
Imports and foreign investment
Loans and reserves
Trade in goods is also known as:
The visible balance
The invisible balance
The income balance
The capital balance
Trade in services includes:
Exports of machinery
Tourism and banking
Foreign investment
Import tariffs
Income flows in the current account refer to:
Profits, dividends, and wages from abroad
Aid from foreign countries
Loans and repayments
Exports and imports
Current transfers include:
One-way transactions like remittances or foreign aid
Investment in foreign firms
Export revenues
Import duties
The balance of trade refers to:
Exports minus imports of goods
All items in the current account
Total inflows and outflows
Investment income
A current account deficit means:
Exports > Imports
Imports > Exports
Savings > Investment
No trade
One key cause of a deficit is:
High export competitiveness
Weak domestic currency
High import spending
Low inflation
A strong domestic currency usually:
Boosts exports
Increases imports
Improves competitiveness
Raises foreign income
Low national savings can lead to:
Current account surplus
Current account deficit
Trade balance
Inflation
High inflation compared to trading partners makes exports:
Cheaper
More expensive
Unchanged
Irrelevant
A high level of consumer spending usually:
Reduces imports
Increases imports
Improves the current account
Reduces growth
Dependence on imported oil can cause:
Surplus
Deficit
Stability
None
A decline in foreign demand for exports causes:
Surplus
Deficit
Inflation
Growth
A fall in productivity will likely:
Improve exports
Reduce competitiveness
Strengthen the currency
Increase savings
Profit repatriation by foreign companies leads to:
Inflow of funds
Outflow of funds
Increase in reserves
Fiscal surplus
Persistent deficits can lead to:
Currency appreciation
Currency depreciation
Export growth
Lower debt
A country with a large deficit may have to:
Borrow from abroad
Increase exports immediately
Reduce imports overnight
Print more money
High foreign borrowing may cause:
Inflation
External debt problems
Currency appreciation
Surplus
Investor confidence may fall due to:
Stable balance
Large current account deficit
Low inflation
High exports
To fix a deficit, a government might:
Increase spending
Cut interest rates
Tighten fiscal and monetary policy
Devalue the currency
A deficit can reduce:
Employment in export industries
Imports
Capital inflow
Investment abroad
Depreciation of currency helps because:
Exports become cheaper
Imports become cheaper
Domestic prices fall
None
Long-term deficits can reduce:
Growth and stability
Investment
Demand for imports
None
Using reserves to cover deficits can:
Strengthen the economy
Deplete foreign exchange
Improve investment
Reduce inflation
Persistent deficits may lead to:
Rising foreign confidence
Balance of payments crisis
Inflation control
Currency appreciation
A current account surplus means:
Imports > Exports
Exports > Imports
Equal trade
Zero income flow
A weak currency helps achieve a:
Surplus
Deficit
Stable account
Recession
Low domestic consumption leads to:
Higher imports
Lower imports
Higher inflation
Currency depreciation
High competitiveness means:
Exports fall
Exports rise
Imports rise
Balance deficit
Export subsidies lead to:
Reduced exports
Increased exports
Increased imports
None
Slow economic growth can cause:
Higher imports
Lower imports
Lower exports
Deficit
High savings rates lead to:
Low exports
Low imports
High consumption
Inflation
High foreign income inflows contribute to:
Surplus
Deficit
Inflation
Currency depreciation
High demand for domestic goods overseas leads to:
Deficit
Surplus
Stable balance
Currency fall
Large oil export revenues can cause:
Deficit
Surplus
Inflation
Recession
A surplus can lead to:
Currency appreciation
Depreciation
Inflation fall
None
High reserves may cause:
Inflationary pressure
Deflation
Currency depreciation
Recession
Too much reliance on exports makes a country:
Stable
Vulnerable to global shocks
Self-sufficient
Inflation-proof
Trade partners may respond with:
Tariffs or restrictions
Aid
Devaluation
Subsidies
A surplus often means:
Low domestic demand
High inflation
High imports
Currency fall
Sustained surpluses can cause:
Overheating of economy
Deficits
Borrowing rise
Unemployment
Large reserves may increase:
Inflation
Imports
Deficits
Unemployment
Export dependence can reduce:
Domestic investment
Savings
Currency value
Growth abroad
If a country’s surplus grows, its currency will likely:
Depreciate
Appreciate
Collapse
Stay fixed
A current account surplus may indicate:
Weak export sector
Strong trade performance
High import costs
Poor competitiveness
