Open Economy Macroeconomics

Which of following form part of Trade in services in BoP:
1. factor income – compensation of employees
2. non-factor income – shipping, banking, insurance, tourism, software services etc.
The correct statement(s) is/are:

Consider the following statements regarding balance of payments:
1. The balance of payments (BoP) record the transactions in goods, services and assets between residents of a country with the rest of the world for a specified time period typically a year.
2. There are two main accounts in the BoP – the current account and the revenue account.
The correct statement(s) is/are:

Consider the following statements regarding Current Account of BoP:
1. The current account records exports and imports in only goods and not services.
2. Excess of current expenditures over current receipts is called Current Account deficit.
The correct statement(s) is/are:

Consider the following statements regarding Real Effective Exchange Rate (REER):
1. It is calculated as the weighted average of the real exchange rates of all its trade partners.
2. It is interpreted as the quantity of domestic goods required to purchase one unit of a given basket of foreign goods.
The correct statement(s) is/are:

An Open economy is an economy which allows:

Consider the following statements:
1. In an open economy, consumers and producers can choose between domestic and foreign goods.
2. Immigration laws promote openness of an economy through facilitation of movement of labour between countries.
The correct statement(s) is/are:

Which of the following is/are important determinants of a national currency to be accepted as international currency?

The balance of payments (BoP) records transaction between residents of a country with the rest of the world for:
1. Goods
2. Services
3. Assets
Choose the correct answer using the options given below:

Consider the following statements:
1. Transfer payments are the receipts which the residents of a country get for ‘free’, without having to provide any goods or services in return.
2. Transfer Payments are given only by private citizens living abroad.
The correct statement(s) is/are:

Consider the following statements:
1. A surplus current account means that the nation is borrower from other countries.
2. Balance of Trade (BoT) is said to be in balance when exports of goods are equal to the imports of goods.
The correct statement(s) is/are:

Which of the following is/are classified under ‘Capital Account’?
1. Foreign Currency
2. Stocks
3. Bonds
4. Government debt
Choose the correct answer using the options given below:

The reserve bank sells foreign exchange when:

Consider the following statements:
1. Autonomous transactions are always conducted with a sole objective to bridge the balance of payments gap.
2. Autonomous transactions are independent of the state of BoP.
The correct statement(s) is/are:

Which of the following is/are participants of foreign exchange market?
1. Commercial banks
2. Foreign exchange brokers
3. Monetary authorities
Choose the correct answer using the options given below:

Which of the following is/are determinants of inflow of foreign currency in the country?
1. Trading of domestic commodities by the foreigners.
2. FDI and portfolio investment in their home nation.
3. Purchase of foreign exchange.
Choose the correct answer using the options given below:

Which of the following is an “advantage” of having a flexible exchange rate?

Consider the following statements:
1. Floating exchange rate is determined by the market forces of demand and
supply.
2. Even inacompletely flexible system, the Central banks with significantly large
foreign exchange reserves intervenes.
The correct statement(s) is/are:

Which of the following best conveys the meaning of ‘depreciation’ in context of currency exchange?

Which of the following institutions are related to the management/maintenance/regulation of India’s foreign exchange reserve?
1. World Bank
2. International Monetary Fund
3. Reserve Bank of India
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The economic term ‘Depreciation’ can be used in which of the following contexts?
1. Depreciation of currency
2. Capital consumption
3. Trade balance
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Which of the following do not form a part of the Balance of Payments (BoP)?
1. Foreign Direct Investment
2. External Lending or borrowing
3. Foreign Institutional Investment
4. Issuing of external bonds
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Full capital account convertibility will imply which of the following?
1. External Commercial borrowings (ECBs) are not limited by the government.
2. There is no limit to export and import of capital goods.
3. Restrictions of foreign institutional investment (FII) are removed completely.
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