Balance of Payments Test

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Balance of Payments Test - 9

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Weekly Quiz Competition

Question 1
1 / -0

If the level of autonomous investment in an economy is Rs.200 crores and consumption function of the economy is :

C=80+0.75Y

What will be the equilibrium level of income?

A
1200

B
1300

C
1000

D
Rs.1120 crores

Solution

For equilibrium level of income,

Y=C+I .......... (1)

C=80+0.75Y, I=200 crores

Substituting the values of C and I in (1) we have

Y=80+0.75Y+200

(Y-0.75Y)=80 +200=280

0.25Y=280

Y=280×100/25=1120
Question 2
1 / -0

If C=80+0.75Y, what will the value of income multiplier?

A
In the given function, mpc=0.75 So,mps =1-mpc=1-0.75=0.25 Hence, k=1/mps=1/0.25=4

B
5

C
7

D
6
Question 3
1 / -0

The balance of payment is a more comprehensive than balance of trade concept. It is

A
Never

B
Always

C
Sometimes

D
Can’t say

Solution

BOT records only merchandise transactions with rest of the world whereas BOP records all transactions with rest of the world.
Question 4
1 / -0

Balance of invisibles is the

A
Value of invisibles exported less value of invisibles imported

B
None of the above

C
Value of visibles exported less value of invisibles imported

D
Value of invisibles exported less value of visibles imported

Solution

We know Net exports =exports -imports. Same is the case with invisibles .
Question 5
1 / -0

Balance of visibles is the

A
Value of visibles exported less value of invisibles imported

B
None of the above

C
Value of invisibles exported less value of visibles imported

D
Value of visibles exported less value of visibles imported

Solution

As per definition .
Question 6
1 / -0

Balance of current account includes

A
Balance of trade and balance of invisibles

B
None of the above

C
Balance of trade and balance of payment

D
Balance of trade and balance of visibles

Solution

These items add to the current flow of goods and services and are included in national income.
Question 7
1 / -0

Balance of capital account includes

A
Borrowings from abroad Only

B
Borrowings from and lending to abroad

C
lending to abroad only

D
None of the above

Solution

Borrowing and lending is done through capital.
Question 8
1 / -0

Which of the following compares the average price of exports to average price of imports?

A
The balance of payments

B
The balance of trade

C
The terms of trade

D
The exchange rate
Question 9
1 / -0

Autonomous Items are also called

A
Below the line items

B
On the line items

C
Above the line items

D
None of the above

Solution

Because these items are recorded in BOP as first items before calculating deficit or surplus.
Question 10
1 / -0

Accommodating Items are also called

A
On the line items

B
None of the above

C
Above the line items

D
Below the line items

Solution

These are those transactions that occur because of other activities like government financing.

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Re-Attempt Weekly Quiz Competition

Balance of Payments Test - 9

Result

Balance of Payments Test - 9

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Rank

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SHARING IS CARING

Question 1

1200

1300

1000

Rs.1120 crores

Solution

Question 2

In the given function, mpc=0.75 So,mps =1-mpc=1-0.75=0.25 Hence, k=1/mps=1/0.25=4

5

7

6

Question 3

Never

Always

Sometimes

Can’t say

Solution

Question 4

Value of invisibles exported less value of invisibles imported

None of the above

Value of visibles exported less value of invisibles imported

Value of invisibles exported less value of visibles imported

Solution

Question 5

Value of visibles exported less value of invisibles imported

None of the above

Value of invisibles exported less value of visibles imported

Value of visibles exported less value of visibles imported

Solution

Question 6

Balance of trade and balance of invisibles

None of the above

Balance of trade and balance of payment

Balance of trade and balance of visibles

Solution

Question 7

Borrowings from abroad Only

Borrowings from and lending to abroad

lending to abroad only

None of the above

Solution

Question 8

The balance of payments

The balance of trade

The terms of trade

The exchange rate

Question 9

Below the line items

On the line items

Above the line items

None of the above

Solution

Question 10

On the line items

None of the above

Above the line items

Below the line items

Solution

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