Current Account

Q.

(a) Balance of payment always balances. Explain.

(b) When the supply of foreign currency rises, the price of foreign currency falls. Justify the statement.

Q.

Find Current Account Balance from the following data:

$\begin{array}{cc}\text{Items}& \text{Rs in lakh}\\ \text{(i)Balance of visible trade}& \text{9, 000}\\ \text{(ii)Export of services}& 9,000\\ \text{(iii)Import of services}& 3,000\end{array}$

1. 18, 000

2. 3, 000

3. 10, 000

4. 15, 000

Q.

Distinguish between the following:

(i) Strategic and minority sale

(ii) Bilateral and multi-lateral trade

(iii) Tariff and non-tariff barriers

Q.

Which of the following transactions are recorded in the current account of the balance of payments?

1. Import and export of goods and services

2. Transfers from one country to the other

3. Both (a) and (b)

4. None of these

Q.

Is Capital account a personal account?

Q.

(a) How does depreciation of domestic currency affect the exports?

(b) How does Make in India project affect foreign exchange rate?

Q.

Find the balance on non-factor services from the following information:

$\begin{array}{cc}\text{Items}& \text{Rs in crore}\\ \text{(i)Balance of visible trade}& 500\\ \text{(ii)Income}& 200\\ \text{(iii)Transfers}& 100\\ \text{(iv)Current account balance}& 900\end{array}$

1. 100

2. 500

3. 700

4. 900

Q.

Which one of the following terms is used to describe trade between two or more countries?

1. Internal trade

2. International trade

3. External trade

4. Local trade

Q.

Define budget deficit and trade deficit. The excess of private investment over savings of a country in a particular year was 2000 crores. The amount of budget deficit was (-) Rs. 1500 crores. What was the volume of trade deficit of that country?

Q.

If the value of visible exports exceeds the value of visible imports, the balance relates to:

1. none of these

2. balance of trade

3. capital account BoP

4. current account BoP

Q.

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

Table 1

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

1. -100

2. +100

3. +200

4. 0

Q.

If balance of trade is showing a deficit of Rs 200 crore and the value of exports is Rs 700 crore, then, the value of imports would be:

1. Rs 900 crore

2. Rs 700 crore

3. Rs 500 crore

4. Rs 200 crore

Q.

Find current account balance from the following:

$\begin{array}{ccc}\text{Items}& & \text{(Rs in crores)}\\ \text{(i) Capital account balance}& & 80\\ \text{(ii) Export of services}& & 20\\ \text{(iii) Balance of visible trade}& & 50\\ \text{(iv) Transfers from one country to an another country}& & 5\end{array}$

Q.

(a) How does giving incentives for exports influence Foreign Exchange Rate? Explain diagrammatically.

(b) How are the following transactions recorded in the balance of payment accounts? Give reasons.

(i) Foreign investment from abroad

(ii) Sale of machinery to abroad

Q.

Why are imports considered as a negative item in the estimation of domestic income?

Q.

What is import? Give any two features of import.

Q.

Name three items which are not included in balance of trade.

Q.

Which of the following are not included in balance of trade?

1. Borrowing from rest of the world

2. Expenditure by the tourists

3. All of these

4. Payment of interest and dividend

Q.

(a) What do you mean by BOP? What are its two accounts?

(b) What are the characteristics of BOP?

Q.

How has the decline in the price of crude oil in the international market helped the government to reduce fiscal deficit?

Q.

Name two items each relating to Current Account BoP and Capital Account BoP.

Q.

The balance of trade shows a deficit of Rs 4, 000 crore and the value of imports are Rs 10, 000 crore. What is the value of exports?

1. 2, 000

2. 4, 000

3. 6, 000

4. 8, 000

Q.

If balance of trade is (-) Rs 600 crore and the value of exports is Rs 500 crore, then the value of imports will be:

1. Rs 1200 crore

2. Rs 1100 crore

3. Rs 300 crore

4. Rs 1300 crore

Q. The scarcity of resources is regarded as the root cause behind central economic problems. Give reasons.

Q.

Balance of trade is measured as:

1. difference between import and export of capital

2. difference between import and exports of goods

3. difference between all exports and all imports

4. difference between import and export of services

Q.

Current account records transactions relating to:

1. non-factor and factor income

2. export and import of goods

3. all of these

4. current transfers

Q.

Calculate the value of imports when the balance of trade (merchandise) is (-) Rs 800 crores and the value of exports is Rs 500 crores.

Q.

State the following true or false:

(a) Accommodating items are undertaken in order to balance the BOP account.

(b) Foreign exchange received on account of textile will be recorded in the capital account of the BOP.

(c) Autonomous items are also known as "Below the line items".

Q.

Invisible items are:

1. Migration of people

2. None of the above

3. Services

4. Goods

Q.

Define budget deficit and trade deficit. The excess of private investment over saving of a country in a particular year was Rs 2, 000 crores. The amount of budget deficit was (−) Rs 1, 500 crores. What was the volume of trade deficit of the country?