MCQExams
0:0:1
CBSE
JEE
NTSE
NEET
Practice
Homework
×
CBSE Questions for Class 12 Commerce Economics Open Economy Macroeconomics Quiz 2 - MCQExams.com
CBSE
Class 12 Commerce Economics
Open Economy Macroeconomics
Quiz 2
Which conference had given birth to International Monetary Fund?
Report Question
0%
Uruguay Round Conference
0%
Round Table Conference
0%
Bretton Woods Conference
0%
Simla Conference
Explanation
The
Bretton Woods conference was held in washington, DC in 1944. It was the period after the great depression and most economies in Europe were failing thus the IMF was set up as a bank where
member states could draw from to maintain economic activity and employment through periodic crises.
What is the main feature of a fixed exchange rate?
Report Question
0%
It is pegged at a certain level by the market
0%
It is pegged at a certain level by the government
0%
It is pegged at a certain level by individuals
0%
It is pegged at a certain level by the central bank
Explanation
In a fixed rate system, the price of the domestic currency in international markets is purely determined by the central bank of the country. It is pegged bilaterally and is artificially maintained at that level by the central bank. It is not allowed to appreciate and depreciate as per the market conditions, the central bank will intervene using forex reserves and hold the exchange rate at the pegged amount.
Basel-II norms are associated with which of the following aspects of the banking industry?
Report Question
0%
Risk management
0%
Manpower planning
0%
Retirement benefits for the employees
0%
Corporate governance
Explanation
Basel II provides guidelines for calculation of minimum regulatory capital ratios and confirms the definition of regulatory capital and an 8% minimum coefficient for regulatory capital over risk-weighted assets. Basel II divides the eligible regulatory capital of a bank into three tiers. These guidelines are related to risk management. Hence, correct answer is option A.
Many times we read about 'PPP' in economic literature. What is PPP?
Report Question
0%
Tells us the exchange rates between currencies are in equilibrium when their purchasing power is the same in both the countries
0%
It tells us the exchange rates between currencies are in equilibrium when they are adjusted for differences in purchasing power.
0%
PPP means the current exchange rate of a currency against US$
0%
A measure of income inequality in developing countries
Explanation
The acronym PPP stands for, "
Purchasing Power Parity". It is a method of
currency
valuation that tells us that the exchange rate
between two countries must be equal to the ratio of the currencies' respective
purchasing power
. ie. two identical goods should eventually cost the same in different countries once adjusted for purchasing power parity.
Value of the Indian currency to a currency of another country shows the concept of the exchange rate.
Report Question
0%
True
0%
False
Explanation
Yes it true, value of the Indian currency to a currency of another country shows the concept of the exchange rate.
Exchange rate is the value of one country's currency with respect to other currency or the rate at which one currency will be exchanged.
Hence a is the correct answer.
___________ is a record of all economic transaction made between the residents of one country with the residents of the rest of the world.
Report Question
0%
Balance of payments
0%
Balance of trade
0%
Balance of current account
0%
Balance of capital account
Explanation
The balance of payments account comprises of the current account and the capital account. The current account consists of the visible and invisible imports and exports of the country as well as unilateral transfers and income receipts and payments. The capital account includes the capital receipts and capital payments such as portfolio investments. It may also maintain an official reserve account to run either a fixed exchange rate regime or a managed float regime. It accounts the country's transactions with the rest of the world.
Which of the following is possible in an open economy?
Report Question
0%
GDP=GNP
0%
GDP>GNP
0%
GDP<GNP
0%
All the three are possible
The National Stock Exchange recently launched Interest Rate Futures (IRF). IRF in fact is a ______________.
Report Question
0%
new mode of trading specifically for SME sector
0%
financial mode of trading
0%
electronic mode of transferring money from one account to another
0%
safest and fastest mode of trading at all the stock exchanges of India simultaneously
Explanation
The National Stock Exchange recently launched Interest Rate Futures (IRF).
IRF in fact is a financial mode of trading as investors can buy and sell interest rate futures contracts from different locations in the country through registered NSE brokers in the same manner as they buy and sell equities and derivatives today. The financial settlement of all the trades is guaranteed by National Securities and Clearing Corporations Ltd (NSCCL).
If we add _______ to national income we get net domestic product.
Report Question
0%
depreciation
0%
net foreign factor income
0%
indirect-tax
0%
transfer payments
What is Forex?
Report Question
0%
It is buying of foreign currency.
0%
It is selling of foreign currency.
0%
It is buying of one currency and selling of another currency.
0%
It is simultaneous buying of one currency and selling of another currency.
Explanation
Foreign exchange refers to the currencies of different countries, except the domestic currency of the country. We can say, foreign exchange is a system dealing with the currencies of different countries. The rate of domestic currency which can be exchanged for foreign currency is known as foreign exchange rate.
Hence d is the correct option.
The outward remittances will be affected at the contractual rate (if forward contract is booked) or at the ____________.
Report Question
0%
TT buying rate
0%
TT selling rate
0%
Both (A) and (B) above
0%
TT buying rate + exchange margin of $$0.15\%$$
0%
None of the above
Explanation
As per the rule 5 of FEDAI guidelines which deals with clean instruments, all outward remittances will be effected at the TT selling rate.
The first public issuance of a company's shares to investors on a stock exchange to raise capital is known as ________.
Report Question
0%
Initial public offer
0%
follow-up offer
0%
mutual fund
0%
hedge fund
Explanation
When the firm decides to operate as a public limited company, the firm will need to offer a portion of its total shares to the public for the first time. This is known as an initial public offering.
Which of these reflect a country's record of all international transactions?
Report Question
0%
Balance of trade
0%
Balance of payment
0%
Statement of accounts
0%
Appropriation account
Explanation
The balance of payments account comprises of the current account and the capital account. The current account consists of the visible and invisible imports and exports of the country as well as unilateral transfers and income receipts and payments. The capital account includes the capital receipts and capital payments such as portfolio investments. It may also maintain an official reserve account to run either a fixed exchange rate regime or a managed float regime. It accounts the country's transactions with the rest of the world. Thus it includes a country's international trading, borrowing and lending.
_________ are shown on the payment side of a balance of payment account.
Report Question
0%
Import of goods
0%
Import of services
0%
Import of capital
0%
All of the above
Explanation
All the options describe sources of leakages from the circular flow of money model, money is flowing out of the economy and thus this will show up as an expense in the payment side of the balance of payments.
Balance of payments of a country records the ____________.
Report Question
0%
country's international trading,borrowing and lending
0%
country's reserve of foreign exchange reserve
0%
country's international indebtness
0%
country's worth of human resource
Explanation
The balance of payments account comprises of the current account and the capital account. The current account consists of the visible and invisible imports and exports of the country as well as unilateral transfers and income receipts and payments. The capital account includes the capital receipts and capital payments such as portfolio investments. It may also maintain an official reserve account to run either a fixed exchange rate regime or a managed float regime. It accounts the country's transactions with the rest of the world. Thus it includes a country's international trading, borrowing and lending.
India devalued Rupee for the first time in ________.
Report Question
0%
1940
0%
1966
0%
1956
0%
1991
Explanation
Facing high inflationary pressures and large government deficits the rupee was devalued in 1966 for the first time.
Balance of payment account includes all of the following, except ____________.
Report Question
0%
capital account
0%
current account
0%
human resource accounts
0%
official settlements account
Explanation
The balance of payments account comprises of the current account and the capital account. The current account consists of the visible and invisible imports and exports of the country as well as unilateral transfers and income receipts and payments. The capital account includes the capital receipts and capital payments such as portfolio investments. It may also maintain an official reserve account to run either a fixed exchange rate regime or a managed float regime. It accounts the country's transactions with the rest of the world.
A countries balance of payment account is considered to be in surplus when ________.
Report Question
0%
total export match total imports
0%
exports of capital match import of capital
0%
if international liquidity has a debit entry
0%
if international liquidity has credit entry
Which of these statement is correct about Balance of Payment?
Report Question
0%
Balance of payment account will always balance in accounting sense
0%
There can be deficit in balance of payment account
0%
There can be surplus in balance of payment account
0%
All the three are possible
Explanation
While the balance of payments account must always balance in an accounting sense, it is possible for the balance of payment account to be in surplus on either the capital or current account, and have and equal amount of deficit to match this surplus.
The total balance of payment statement __________.
Report Question
0%
is always in balance
0%
may show deficit
0%
may show surplus
0%
all the three possible
Explanation
While the balance of payments account must always balance in an accounting sense, it is possible for the balance of payment account to be in surplus on either the capital or current account, and have and equal amount of deficit to match this surplus.
Balance of payment accounts are prepared on a _________.
Report Question
0%
double account basis
0%
double entry system basis
0%
single entry system basis
0%
none of the above
A country reflects its international transactions in its _______.
Report Question
0%
balance of trade
0%
balance of payment
0%
statement of account
0%
appropriation account
Explanation
The balance of payments accounts comprises the current account and the capital account. The current account consists of the visible and invisible imports and exports of the country as well as unilateral transfers and income receipts and payments.
The capital account includes capital receipts and capital payments such as portfolio investments. It may also maintain an official reserve account to run either a fixed exchange rate regime or a managed float regime.
It accounts for the country's transactions with the rest of the world. Thus it includes a country's international trading, borrowing, and lending.
A countries balance of payment account is considered to be in deficit when ________.
Report Question
0%
total export match total imports
0%
exports of capital match import of capital
0%
if international liquidity has a credit entry
0%
if international liquidity has a debit entry
Explanation
A country's balance of payment account is considered to be in deficit
means the country imports more goods, services, and capital than it exports.
In this case, it must borrow from other countries to pay for its imports.
Hence C is the correct answer.
Balance of payment on current account excludes ______.
Report Question
0%
borrowing and lending
0%
borrowing only
0%
lending only
0%
none
Explanation
The balance of payments account comprises of the current account and the capital account. The current account consists of the visible and invisible imports and exports of the country as well as unilateral transfers and income receipts and payments. The capital account includes the capital receipts and capital payments such as portfolio investments. Thus borrowing and lending is recorded here. It may also maintain an official reserve account to run either a fixed exchange rate regime or a managed float regime. It accounts the country's transactions with the rest of the world.
Surplus in capital account means ________.
Report Question
0%
investment more than savings
0%
saving more than investment
0%
saving equals investment
0%
none of these
Explanation
Balance of capital account refers to the balance of capital transfers - borrowing and lending from abroad and sales and purchases of assets (export and import of capital), gold and foreign exchange from other countries.
It is in equilibrium when domestic and foreign saving and investment are equal. Thus a surplus implies that savings in the country
exceed investments abroad.
_____ is used to record changes in the official reserve.
Report Question
0%
Official settlements account
0%
Capital account
0%
Current account
0%
Official Reserve account
Explanation
The
official settlement account
keeps track of transactions mainly involving
foreign exchange reserves and special drawing rights but may also include
gold, bank deposits. It is used too record changes in the official reserves.
How is the state of balance of payments affects, when government is directly innvovled in foreign trade?
Report Question
0%
Balance in BOP improves
0%
Balance of BOP deteriorates
0%
Depends upon trade balance
0%
None of these
Which of these measures will reduce deficit on the current account of the balance of payments through the use of fiscal policy?
Report Question
0%
Increase in Direct Taxation
0%
Imposing import quota
0%
Raise interest rates
0%
Raise custom duty
Explanation
Employing the tool of increased direct taxation, will lead to consumer disposable income falling. Thus , the consumers will reduce consumption overall. This will also include a reduction spending on imports and thus the amount of money flowing out of the country is likely to reduce, leading to a reducing current account deficit. The other mentioned tools would also serve to be useful, however, they are not a part of fiscal policy.
Resident of X country goes to Y country and utilize the services of Y country,this transaction will be shown as _______ on the balance of payment account.
Report Question
0%
receipt side of Y country and payment side of X country
0%
receipt side of X country and payment side of Y country
0%
Payment side of Y country
0%
receipt side of X country
Layla a resident of
country
Y is working with country Z. She remits 15,000 to her family back in country Y. This will show as __________ in the balance of payment account.
Report Question
0%
debit in country Y's balance of payment statement (15000) as unilateral transfer
0%
credit entry in country Z's balance of payment statement (15000) as Unilateral transfer
0%
Both a and b
0%
Either a or b
Explanation
The amount will show up as a unilateral transfer on both countries' balance of payments as the transfer of money is leaving/entering the economy and it must be recorded as it will affect the balance of payments.
0:0:1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
0
Answered
0
Not Answered
0
Not Visited
Correct : 0
Incorrect : 0
Report Question
×
What's an issue?
Question is wrong
Answer is wrong
Other Reason
Want to elaborate a bit more? (optional)
Practice Class 12 Commerce Economics Quiz Questions and Answers
<
>
Support mcqexams.com by disabling your adblocker.
×
Please disable the adBlock and continue.
Thank you.
Reload page
