Capital Account

Q.

How is the exchange rate determined under the flexible exchange rate regime?

Q.

Differentiate between balance of trade and current account balance.

Q.

What are secondary deposits?

Q.

NRI deposits are:

1. Included in the current account

2. Included in the capital account

3. Not included in the BOP

4. Included in the official reserves

Q.

Which of the following items relate to BoP on capital account?

1. Loans

2. All of these

3. NRI remittances

4. Foreign investment

Q.

_____ refers to the structure of total capital funds raised by the company.

Q.

Estimatie the Capital Account Balance from the following data.

$\begin{array}{cc}\text{Items}& \text{US million \$}\\ \text{External Assistance (net)}& 606\\ \text{External Commercial Borrowing (net)}& 3,429\\ \text{Short-term Debt}& 69\\ \text{Banking Capital (net) (inclusive of NRI Deposits)}& -542\\ \text{Foreign Investment (net)}& 38,385\\ \text{Other Flows (net)}& -3,407\end{array}$

1. 35, 000

2. 38, 500

3. 38, 540

4. 38, 650

Q.

Based on Table 1, the balance on the capital account is:

Table 1

$\begin{array}{cc}\text{Exports of goods and services}& 1000\\ \text{Importants of goods and services}& 800\\ \text{Net change in assets owned abroad}& 500\\ \text{Net change in foreign owned assets at home}& 400\\ \text{Unilateral transfers received}& 100\\ \text{Unilateral transfers paid}& 200\\ \text{Investment income paid to foreigners}& 300\\ \text{Investment income received from foreigners}& 400\end{array}$

1. +200

2. +100

3. 0

4. -100

5. -200

Q.

Differentiate between physical capital and human capital.

Q.

If the multinational companies outsource many services to countries like India because of cheap manpower, what will happen to people living in the countries where the companies are located? Identify the value being violated by the multinational companies.

Q.

Why is flexible rate of exchange called free rate of exchange?

Q.

Provision of credit in terms of foreign exchange is a:

1. All of these

2. Hedging function of foreign exchange market

3. Credit function of foreign exchange market

4. transfer function of foreign exchange market

Q. Distinguish between current account and capital account of the balance of payments account on the basis of its components.

Q. Distinguish between ex-ante and ex-post investment.

Q. Distinguish between an entrepreneur and an organiser.

Q. Explain the types of investment expenditure.

Q.

Calculate net investment in India from this data.

$\begin{array}{cc}\text{FDI from China in India}& 1000\\ \text{FPI from India in Brazil}& 600\\ \text{FPI from India in Japan}& 100\\ \text{FDI from India in Japan}& 30\end{array}$

1. 130

2. 270

3. 340

4. 670

Q. What is meant by capital account?

Q.

PepsiCo in India is a form of Foreign Portfolio Investment. State true or false.

1. True

2. False

Q. Capital formation and accumulation depends upon the rate of __________, which in turn depends upon the level of income.

1. savings
2. export demand
3. none of the above
4. import duties

Q. The opportunity cost of capital investment is _______.

1. sacrifice of current consumption
2. more consumption on luxury items
3. wastage of resources
4. lower capital growth in future

Q.

Borrowings belong to:

1. Capital account

2. Current account

3. Official Reserves Account

4. None of the above

Q. Will ex-ante saving always be equal to the ex-ante investment?

Q. The utility may be defined as ______.

1. the power of commodity to satisfy wants
2. the usefulness of a commodity
3. the desire for a commodity
4. none of the above

Q. FDI in E-Commerce activities is allowed upto ______.

1. 46%
2. 51%
3. 100%
4. 44%

Q. What is the difference between ex-ante investment and ex-post investment ?

Q. FDI in Private Security Agencies is allowed up to _______.

1. 26%
2. 49%
3. 74%
4. 100%

Q. The capital account BOP shows us a net change in the country’s ownership of assets and liabilities.

1. False
2. True

Q. 1-relationship between demand for foreign exchange and exchange rate(inverse or direct)
2-relationship between exchange rate and demand for foreign exchange.(inverse or direct)
3-is improvement in exchange rate of country currency always beneficial?in this it is appreciate or dep as acc to me it is dep. as in diagrams we make when exhange rate inc. our country currency is depreciated.

Q. FDI upto ______ is being allowed in defense production.

1. 26%
2. 49%
3. 74%
4. 51%