Items in the BOP

Q.

Balance of payments always balances. Does it mean a situation of zero net financial obligation for a country?

Q.

Disequilibrium in the balance of payments leads to:

1. both (a) and (b)

2. decrease in official reserves with RBI

3. increase in official reserves with RBI

4. none of these

Q.

Accommodating items are those items of BoP which:

1. are not determined by considerations of profit

2. are conditioned by the positive or negative BoP status

3. all of these

4. lead to increase or decrease in official reserves with RBI

Q.

Balance of payment is in disequilibrium when:

1. all of these

2. current account balance + capital account balance is not equal to zero

3. current account balance + capital account balance is some negative number

4. current account balance + capital account balance is some positive number

Q.

Foreign exchange reserves increase if:

1. Government increases taxes

2. Exports increase while imports remain the same

3. Imports increase while exports remain the same

4. Both a and b

Q.

Give the relationship between the revenue deficit and the fiscal deficit.

Q.

If balance of trade shows a surplus of Rs 300 crore and unilateral payment is Rs 50 crore, how much is the balance on the capital account of balance of payments?

1. 50

2. -300

3. 350

4. -350

Q.

Cause of BoP imbalance relates to:

1. neither (a) nor (b)

2. autonomous items

3. accomodating items

4. both (a) and (b)

Q.

Based on Table 1, the statistical discrepancy 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. +100

2. +200

3. 0

4. -100

5. -200

Q.

Autonomous items are related to those transactions which:

1. none of these

2. both of the given options

3. are not concerned with the equilibrium status of BoP

4. are determined by the motive of profit

Q.

Final balance of payments of an economy is:

1. Always in a deficit

2. Always in a surplus

3. Always balanced

4. Subject to wide fluctuation

Q.

How is BoP deficit or BoP surplus estimated?

Q. Give the meanings of Balance of Trade and Balance on Current Account of Balance of Payments Accounts.

Q. A consumer consume only two goods $X$ and $Y$ and is in equilibrium. Show that when the price of good $X$ rises, the consumer buys less of good $X$. Use utility analysis.

Q. The Foreign Exchange Reserves of India consist of __________.

1. Foreign Currency Assets held by RBI
2. Gold Holdings of RBI
3. Special Drawing Rights (SDRs)
4. All of the above

Q. Giving reasons explain where charity to foreign countries is recorded in the Balance of Payments Accounts.

Q. How Is a deficit or a surplus on the current account restored?

Q. Surplus in capital account means ________.

1. investment more than savings
2. saving more than investment
3. saving equals investment
4. none of these

Q. Explain equilibrium price with the help of demand and supply curves.

Q. Foreign exchange transactions which are independent of other transactions in the Balance of Payments Account are called _________________.

1. Current Transactions
2. Accommodating Transactions
3. Capital Transactions
4. Autonomous Transactions

Q. Capital receipts are regular and recurring in nature.

1. True
2. False

Q. Foreign exchange transactions dependent on other foreign exchange transactions are called : (choose the correct alternative)

1. Capital account transaction
2. Current account transaction
3. Autonomous transaction
4. Accommodating transaction

Q. Autonomous items are also known as 'below the line' items.

1. True
2. False

Q. Give the meanings of 'autonomous' transactions and 'accommodating' transactions in the Balance of Payments Accounts.

Q. State whether the following transactions will be recorded on debit or credit side of BOP.
(i) Loan from IMF to cover deficit of BOP.
(ii) Indian Government repays loan taken from IMF.
(iii) Purchase of shares of Infosys by a Japanese resident.
(iv) Export of Jute to Sri Lanka.
(v) Acquisition of a foreign company by Tata.
(vi) Purchase of toys from China.

Q. An economy is in equilibrium. From the following data. calculate the marginal propensity to save :
(a) Income $=10,000$
(b) Autonomous consumption $=500$
(c) Consumption expenditure $=8,000$

Q. Which of these is/are a positive statement(s).

1. export of onion ought to be banned to check rising prices of onion in domestic market
2. forwarding trading in commodities ought to be banned to curb rising prices
3. export of onion has created shortage of domestic supply of onions
4. all of the above

Q. Marco economics is a ________ equilibrium analysis.

1. general
2. partial
3. semi-partial
4. aggregate

Q. Which of these statement is correct about Balance of Payment?

1. Balance of payment account will always balance in accounting sense
2. There can be deficit in balance of payment account
3. All the three are possible
4. There can be surplus in balance of payment account

Q. What is the most visible sign of recession in an economy?

1. Fall in the level of employment
2. Rise in the inventory cost
3. Weakening stock market
4. Fall in price level