Balance of Payments Test

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Balance of Payments Test - 5

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Weekly Quiz Competition

Question 1
1 / -0

Foreign exchange rate of a country is the

A
price of a foreign factor in terms of the domestic factor

B
price of a foreign trade in terms of the domestic trade

C
price of a foreign good in terms of the domestic good

D
price of a foreign currency in terms of the domestic currency

Solution

Foreign exchange rate defines the price of currency of domestic country in terms of foreign currency
Question 2
1 / -0

_______ refers to public revenue, expenditure and allied matters.

A
Economic policy

B
Monetary policy

C
Fiscal policy

D
None of these

Solution

Fiscal policy
Question 3
1 / -0

Foreign exchange means

A
Any currency

B
Domestic currency

C
Any currency other than the domestic currency

D
US Dollars

Solution

A currency legal tender in the country in which it is printed and not legal tender in other country unless it is exchanged for foreign currency.
Question 4
1 / -0

Balance of payment Accounts is a

A
Systematic record of all economic transactions between the residents of a country

B
Systematic record of all receipts between the residents of a country and abroad

C
Systematic record of all expenditures between the residents of a country and abroad

D
Systematic record of economic transactions between the residents of a country & abroad

Solution

Balance of payment account is a systematic record of all economic transactions between residents of home country and residents of foreign countries during a given point of time.
Question 5
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Balance of payments of a country includes:

A
Current account

B
Capital account

C
Moentary account

D
All of these

Solution

All of these
Question 6
1 / -0

A deficit in balance of trade indicates

A
That the imports of good are equal to the exports

B
That the imports of good are less than the exports

C
That the imports of good are greater than the exports

D
That the imports of good are equal to the exports

Solution

A trade deficit represents outflow of domestic currency that takes place when value of imports exceed value of exports.
Question 7
1 / -0

Fixed exchange rate is

A
is fixed by the businesses in an economy

B
is fixed by the foreign exchange market

C
is fixed by the Government in an economy

D
is fixed by the anybody in an economy

Solution

A fixed exchange rate is a country's exchange rate regime under which the government or Central bank ties the official exchange rate to another country's currency or to the price of gold. The purpose of a fixed exchange rate system is to maintain a country's currency value within a very narrow band.
Question 8
1 / -0

Flexible exchange rate is

A
Determined

B
Can’t say

C
Ordered

D
Fixed

Solution

flexible exchange-rate system is a monetary system that allows the exchange rate to be determined by supply and demand.As it variates according to market forces.
Question 9
1 / -0

Flexible exchange rate is determined by

A
Demand for foreign exchange

B
Government

C
Market forces of demand and supply

D
Supply of foreign exchange

Solution

It is determined by market forces because every currency area must decide what type of exchange rate arrangement to maintain. Between permanently fixed and completely flexible however, are heterogeneous approaches. They have different implications for the extent to which national authorities participate in foreign exchange markets.
Question 10
1 / -0

Final balance of payments of a country is:

A
Fluctuates

B
Always surplus

C
Always deficit

D
Always balanced

Solution

Always balanced

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Balance of Payments Test - 5

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Balance of Payments Test - 5

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Question 1

price of a foreign factor in terms of the domestic factor

price of a foreign trade in terms of the domestic trade

price of a foreign good in terms of the domestic good

price of a foreign currency in terms of the domestic currency

Solution

Question 2

Economic policy

Monetary policy

Fiscal policy

None of these

Solution

Question 3

Any currency

Domestic currency

Any currency other than the domestic currency

US Dollars

Solution

Question 4

Systematic record of all economic transactions between the residents of a country

Systematic record of all receipts between the residents of a country and abroad

Systematic record of all expenditures between the residents of a country and abroad

Systematic record of economic transactions between the residents of a country & abroad

Solution

Question 5

Current account

Capital account

Moentary account

All of these

Solution

Question 6

That the imports of good are equal to the exports

That the imports of good are less than the exports

That the imports of good are greater than the exports

That the imports of good are equal to the exports

Solution

Question 7

is fixed by the businesses in an economy

is fixed by the foreign exchange market

is fixed by the Government in an economy

is fixed by the anybody in an economy

Solution

Question 8

Determined

Can’t say

Ordered

Fixed

Solution

Question 9

Demand for foreign exchange

Government

Market forces of demand and supply

Supply of foreign exchange

Solution

Question 10

Fluctuates

Always surplus

Always deficit

Always balanced

Solution

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