Free The Open Economy 02 Practice Test - 12th Grade - Commerce
Question 1
Forward market is that market which:
handles transactions of foreign exchange meant for future delivery
handles current as well as future transactions.
handles current transactions.
None of these
SOLUTION
Solution : A
Forward market deals with foreign exchange transactions that are meant for future delivery.
Question 2
If Rs 150 are required to buy $2, instead of Rs 100 earlier, then:
both depreciation of the domestic currency and rise in the import bill occur
rupee value of import bill will increase
domestic currency has appreciated
domestic currency has depreciated
SOLUTION
Solution : A
This is a case of depreciation, and the import bill rises as a result.
Question 3
Which of the following items relate to BoP on capital account?
Foreign investment
NRI remittances
Loans
All of these
SOLUTION
Solution : D
The capital account looks at NRI deposits, loans and foreign investment.
Question 4
Autonomous items are related to those transactions which:
are not concerned with the equilibrium status of BoP
are determined by the motive of profit
both of the given options
none of these
SOLUTION
Solution : C
Autonomous items have profit-motive and take place regardless of the BoP.
Question 5
Current account records transactions relating to:
export and import of goods
current transfers
non-factor and factor income
all of these
SOLUTION
Solution : D
Current account looks at all these items.
Question 6
The sale and purchase of financial assets is not a part of the BoP. State true or false.
True
False
SOLUTION
Solution : B
The given statement is false. Financial assets are a part of the BoP.
Question 7
Calculate trade balance if exports are 500 and imports are 900.
-400
400
500
1,400
SOLUTION
Solution : A
The trade balance is exports minus imports.
Question 8
Payment for shipping is a:
Visible item
Factor service payment
Non-factor service payment
Not an item in the BOP
SOLUTION
Solution : C
Payment for shipping is a non-factor service payment.
Question 9
Invisible items are:
Goods
Services
Migration of people
None of the above
SOLUTION
Solution : B
Services are invisible items.
Question 10
PepsiCo in India is a form of Foreign Portfolio Investment. State true or false.
True
False
SOLUTION
Solution : B
PepsiCo is an enterprise so it is part of foreign direct investment.