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Indian Economy Test 4
Read Instructions for the test.
Negative marks are -0.33 per wrong answer
Right answer is 1 mark
No time limit but finish in 30 mins
Solution can be found at below chapters:
Test series is based on following chapters.
Indian Economy Chapter 5: MACROECONOMICS
Indian Economy Chapter 6: Financial Facts
Q1: Current account component of balance of payments includes
exports and imports in goods
exports and imports in services
transfer payments
all
Q2: invisible trade is called
trade in goods
trade in services
both
none
Q3:Trade in services is with features like
they aren’t seen to cross national borders
includes factor income and non factor income
both
none
Q4: Transfer payments are receipts which
country’s citizens receive for free
Remittances, gifts, grants
both a and b
international loans
Q5:which is true ?
India has a current account deficit
India has a capital account surplus
both
none
Q6: India has a capital account surplus due to
FDI
FII
External borrowings
all
Q7: balance of exports and imports of goods =
balance of trade
balance of payments
both
none
Q8: Balance of Payments equilibrium is when
current account is in surplus
current account is in surplus
both
none
Q9: When a country has negative balance of payments its monetary authority
sells foreign exchange
buys foreign exchange
both
none
Q10:When the country has positive balance of payments its monetary authority
sells foreign exchange
buys foreign exchange
neutral stance
a or b
Q11: Which is true ?
BOP being positive is usually bad for exporters as the rupee appreciates
BOP negative is usually bad for importers as rupee weakens.
both
none
Q12: Foreign Exchange Reserves of India include
Gold reserves with RBI
Foreign exchange assets with RBI
Special drawing rights with IMF
all
Q13: Foreign Exchange Reserves of India dont include
loans taken from foreign bodies
grants received from foreign bodies
NRI deposits
all
Q14: Foreign direct investment is
Any investment in unlisted companies
investment > 10% in listed companies
both
none
Q15: Foreign institutional investment is
less than 10% in listed companies
more than 10% in listed companies
exactly 10% in listed companies
none
Q16: Which is true?
F.D.I is long term relation with the company
F.I.I is short term and anonymous.
both
none
Q17: Which is true ?
F.D.I is investment in equity instruments not debt instruments
F.I.I can’t invest in T-Bills
FII can buy G-Secs of Rs.30 billion and corporate bonds Rs. 50 billion
all
Q18: ratio of foreign to domestic prices measured in the same currency =
Real exchange rate
nominal exchange rate
fixed exchange rate
floating exchange rate
Q19: A pen cost $4 in USA and nominal exchange rate is Rs. 50 per dollar. And the RER is 1. Then the pen should cost Rs. ____ in India
200
250
300
500
Q20: If the Real Exchange Rate is more than 1 it means
exports are competitive
exports are uncompetitive
nothing to do with competitiveness
none
Q21: It is a multilateral exchange rate representing price of a representative basket of foreign currency each weighted by its importance to India as a trade partner.
Nominal effective interest rate NEER
real effective exchange rate REER
both
none
Q22: REER > 100 means currency is
over valued.
under valued
neutral
none
Q23: Floating exchange rates is decided by
monetary authority
Central government
both a and b
market forces of demand and supply
Q24: Fixed exchange rates or pegged exchange rate was created in the
Bretton woods system of 1944
World economic forum
world bank
IMF
Q25: Pros and cons of fixed rate system
Good for trade as it promotes flexibility and predictability in exchange rates.
Since dollar was pegged to gold the USA wars in Vietnam, Korea reduced the value of dollar but gold price increased in the open market.
Gold could now be purchased at lower price from USA and sold in market for higher price.
all
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