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CBSE Questions for Class 12 Commerce Economics Open Economy Macroeconomics Quiz 3 - MCQExams.com
CBSE
Class 12 Commerce Economics
Open Economy Macroeconomics
Quiz 3
Resident of Y country goes to X country and utilize the services of Y country,this transaction will be shown as ______ on the balance of payment account.
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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
The government of India has decided to vaccinate the adult population of India (with
Covaxin/Covishield), without any charge. This would be categorised as ……… . (Fill in
the blank with correct alternative).
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0%
revenue nature income
0%
capital nature expenditure
0%
revenue nature expenditure
0%
capital nature income
Explanation
The given case is an example of revenue
expenditure as it doesn’t lead to increase in assets
or decrease in liabilities of the country. Hence, correct answer is option C.
Primary gold is of ____ carat.
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0%
22
0%
23
0%
24
0%
18
Explanation
24-carat gold is the pure form of gold.
Primary gold is 24 carats.
A 24 Karat gold is 100 per cent pure gold and does not have any other metal mixed
Hence c is the correct answer.
ADR stands for _____.
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0%
Australian Depository Receipts
0%
Ancient Demand Receipts
0%
American Depository Receipts
0%
Asian Diamond Reserves
Explanation
American Depositary Receipts (ADR) are negotiable security instruments that are issued by a US Bank that represent a specific number of shares in a foreign company that is traded in US financial markets. Hence, correct answer is option C.
International reserves include _______.
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0%
government holding of gold
0%
balance in International Monetary Fund
0%
foreign currency reserves
0%
all the three
Explanation
International reserves include gold reserves, forex reserves and a balance held with the IMF that he country can draw from with times off stress. All three help the country maintain its position on the international market and manage its balance of payment account, by influencing its exchange rate.
GDR stands for _______.
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0%
Global Depository Receipts
0%
Global Demand Receipts
0%
Government Department Receipts
0%
Gold Deposit Receipts
Explanation
GDR stands for Global Depositary Receipt.
GDR is a foreign currency-denominated derivative instrument in the form of depository receipts created outside India and issued to non-resident investors. GDR stands for Global Depository Receipt. It is a bank certificate issued in more than one country for shares in a foreign company.
Hence a is the correct option.
Quantitative restrictions mean _________.
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a restriction by Government on quantity of export or imports of goods from or to a country
0%
a restriction by Government on quantity of production of goods by a country.
0%
a restriction by Government on quantity of sale of goods by a manufacturer
0%
a restriction by Government on quantity of quantity of raw material consumed.
In what way devaluation helps a country?
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0%
Improvement in Balance of Payment situation
0%
Encourages exports
0%
Discourages imports
0%
All the three
Explanation
A devaluation of the currency may help improve the balance of payments situation when it is in a deficit, as a devaluation makes it attractive to purchase domestic goods as it becomes relatively cheaper to do so thus the value of imports is likely to decrease and the value of exports is likely to increase.
Which of these measures is / are essential to make devaluation successful?
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0%
Export performance of exporting units should be strengthened
0%
Export quality should be improved
0%
Domestic prices should be checked
0%
All the three
Depreciation of currency means a ________.
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0%
fall in exchange value of a country by market forces
0%
reduction in external value/exchange value of currency by the Government
0%
reduction in external value / exchange value due to wear and tear
0%
all the three
Explanation
When a country follows a floating exchange rate regime, it is possible for the currency to fall in value due to a fall in demand for the currency that can be caused for a variety of reasons like decline of demand for the country's exports or attractive investment opportunities abroad.
Devaluation of currency means a ________.
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0%
fall in exchange value of a country by market forces
0%
reduction in external value /exchange value of currency by the Government
0%
reduction in currency value due to wear and tear
0%
all the three
Explanation
When the country follows a fixed exchange rate regime the government constantly has to revalue and devalue the currency in order to maintain the pegged exchange rate. When there is upwards market pressure on the currency to appreciate, the central bank will artificially devalue the currency by buying up foreign reserves.
Foreign investments includes _______.
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0%
foreign direct investments
0%
portfolio investments
0%
foreign institutional investments
0%
all the three
Explanation
Foreign investment includes foreign direct investment and foreign institutional investment.
1:Foreign Direct Investment is a self-explanatory term. FDI is when an investor from another country (foreign country) makes an investment in a business situated in the country.
2:Portfolio investment refers to the investment made in financial assets of a foreign country. It is generally for a short period of time.
3:Foreign Institutional Investors (FII) are an investment fund or a gathering of investors. Such a fund is registered in a foreign country, i.e. not in the country it is investing in.
Hence d is the correct answer.
If there is a surplus in Balance of payments ______.
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0%
it adds to external reserves of a country
0%
it adds to internal reserves of a country
0%
it reduces external reserves
0%
it reduces internal reserves
Explanation
A balance of payments surplus means
the country exports more than it imports
. A surplus boosts economic growth in the short term. Hence, correct answer is option A.
Deficit in BOP sharply increased after ______.
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0%
fifth plan
0%
fourth plan
0%
sixth plan
0%
seventh plan
Balance of payment accounts are prepared on _________.
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0%
single entry system basis
0%
double entry accounting system basis
0%
double accounts basis
0%
none of these
Explanation
Balance of payment accounts are prepared on a double-entry accounting system basis.
One side all receipts and another side all payment recorded, it means a corresponding entry is made for every transaction, i.e. debits and credits.
It is an essential document or transaction in the finance department as it gives the status of a country and its economy.
Hence b is the correct answer.
Dual exchange rate was introduced in _______.
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0%
1992-93
0%
1989-90
0%
1999-2000
0%
1993-94
Explanation
According to the RBI "The Liberalised Exchange Rate Management System (LERMS) was put in place in March 1992 involving the dual exchange rate system in the interim period. The dual exchange rate system was replaced by a unified exchange rate system in March 1993".
India classifies invisibles into____items.
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0%
10
0%
11
0%
8
0%
12
FOB stands for _______.
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0%
Free On Board
0%
Free Of Bond
0%
Freight On Board
0%
Freedom Of Bond
Tariff means ________.
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0%
a tax on imported goods
0%
a tax on exports
0%
a tax on consumption
0%
a tax on savings
FERA was replaced by ________.
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0%
FEMA
0%
FEMINA
0%
FENA
0%
FIFA
Explanation
In 1999 the
Foreign Exchange Management Act replaced the Foreign
Exchange Regulation Act.
This act makes offences related to foreign exchange civil offences.
Balance of payment on current account excludes _______.
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0%
lending only
0%
borrowing only
0%
both of the above
0%
none of the above
_________ is the systematic record of all transaction between a country and the rest of the world.
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0%
Balance of trade
0%
Balance of payments
0%
Balance of capital account
0%
Balance of current account
Explanation
Balance of payments is the systematic record of all economic transactions between residents of one country and residents of other countries.
It record of all monetary and economic transactions made between a country and the rest of the world within a defined period (every quarter or year). These records include transactions made by individuals, companies and the government.
Hence b is the correct answer.
The share of concessional debt in total external debt of India had _________ in 2011.
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0%
remained the same
0%
doubled
0%
reduced
0%
increased
Explanation
The share of concessional debt in total external debt of India had reduced to $$18\%$$ in June $$2011$$.
If India exports goods worth Rs.$$20$$ crores and imports goods worth Rs.$$30$$ crores, it will ________________.
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0%
have a surplus of Rs$$10$$ crores in balance of trade
0%
have a deficit of Rs$$10$$ crores in balance of trade
0%
have a deficit of Rs$$50$$ crores in balance of trade
0%
can't say
Explanation
BOT = Export-Import i.e. Rs.20 - 30 = Rs. 10 crore deficit. When imports exceed exports then the balance is in deficit.
Hence, option B is correct.
The Foreign Exchange Reserves of India consist of __________.
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0%
Foreign Currency Assets held by RBI
0%
Gold Holdings of RBI
0%
Special Drawing Rights (SDRs)
0%
All of the above
Explanation
Foreign exchange reserves of India Consists of Foreign currency assets held by RBI, gold holding of RBI, special drawings Rights.
Foreign exchange reserves of India are holdings of cash, bank deposits, bonds, and other financial assets. Hence, D is the correct option.
In the balance of Payments Statement of a country, the current account includes:
(i) Invisible items
(ii) Foreign direct investment
(iii) Government loans from abroad
(iv) Errors and omissions
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0%
(i) only
0%
Both (i) and (ii) above
0%
Both (ii) and (iii) above
0%
Both (i) and (iv) above
India has achieved full convertibility of the Rupee in _________.
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0%
current account
0%
capital account
0%
both (a) and (b)
0%
neither (a) nor (b)
Explanation
The Indian rupee has been made fully convertible in current account transactions.
It is a system where a country's currency becomes convertible in foreign exchange. It is the ease with which a country's currency can be converted into currency through global exchanges.
Hence option a is the correct answer.
FERA stands for ____________.
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0%
Foreign Export Revaluation Act
0%
Funds Exchange Resources Act
0%
Finance and Export Regulation Association
0%
Foreign Exchange Regulation Act
Explanation
FERA stands for Foreign Exchange Regulation Act,
1973
.
BOP is in deficit, then __________.
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0%
it adds to external reserves of the country
0%
it draws from external reserves of the country
0%
it adds to internal reserves of the country
0%
it draws from internal reserves of the country
Balance of payments is a stock concept.
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0%
True
0%
False
Explanation
Balance of Payments is a 'FLOW' concept. It is an accounting statement showing economic transactions between residents of a country and rest of the world in a given "PERIOD OF TIME".
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Practice Class 12 Commerce Economics Quiz Questions and Answers
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