Deck 7: Indias Balance of Payments and Foreign Trade: Part A

Question 1

By restricting imports through the quota system, the deficit is

A)Reduce
B)Increase
C)Improve
D)None of the above

Answer 1

Reduce

Question 2

A deficit in BOP occurs when

A)Credit>debit
B)CreditC)Credit=debit
D)None of the above

Answer 2

Credit

Question 3

Fundamental disequilibrium is

A)A short-term nature
B)A medium-term nature
C)A long-term nature
D)None of the above

Answer 3

A long-term nature

Question 4

Deflation as a measure of correcting deficit in BOP tends to make

A)domestic goods relatively cheaper to foreign goods
B)domestic goods relatively dearer to foreign goods
C)foreign goods relatively cheaper to domestic goods
D)foreign goods relatively dearer to domestic goods

Question 5

in 1991, India devalued its currency by 18 per cent to

A)19%
B)20%
C)21%
D)22%

Question 6

When government imposed tariffs, it results in improvement of

A)Balance of trade situation
B)Balance of payments situation
C)International transactions
D)Domestic transactions

Question 7

Which of the following is not a type of disequilibrium in BOP?

A)Temporary disequilibrium
B)Fundamental disequilibrium
C)Structural disequilibrium
D)Constant disequilibrium

Question 8

Invisible exports and imports are the component of

A)Current account
B)Capital account
C)Savings account
D)None of the above

Question 9

Exports that are estimated on free on board (f.o.b.) basis signifies that

A)the transportation costs, costs of insurance etc. are not included
B)the transportation costs, costs of insurance etc. are included
C)both (a) and (b)
D)none of the above

Question 10

Imports that are estimated on carriage, insurance and freight (c.i.f.) basis signifies that

A)the transportation costs, costs of insurance and freight get included.
B)the transportation costs, costs of insurance and freight get excluded.
C)Both (a) and (b)
D)None of the above

Question 11

The Indian rupee was made a freely convertible currency on current account since the year

A)1981
B)1991
C)1994
D)2004

Question 12

Which of the following statements about the direction of India's foreign trade is correct?

A)The share of Asia and ASEAN in total trade has increased significantly
B)The share of Asia and ASEAN in total trade has decreased significantly
C)The share of Asia and ASEAN remain constant over the years
D)The share of Asia and ASEAN is highly fluctuating

Question 13

NRI deposits are

A)Major source of capital inflows into India
B)Not a source of capital inflows into India
C)Negligible source of capital inflows into India
D)None of the above

Question 14

India's top import item is

A)Coal
B)Gold
C)Fertilizer
D)Crude oil

Question 15

India's top export item is/are

A)Mineral, fuels, oils, etc
B)Gold
C)Precious or semi-precious stones
D)Fertilizers

Question 16

The most important item of import for India in terms of value is

A)Mobile handset
B)POL
C)Gold
D)Electronic goods

Question 17

The biggest exporter of goods to India during 2018-190 is

A)USA
B)UAE
C)China
D)Japan

Question 18

The biggest trading partner of India is

A)USA
B)UAE
C)China
D)Saudi Arabia

Question 19

Since the inception of planning era in 1951, India has been facing the problem of

A)Trade deficit
B)Current account deficit
C)Both (a) and (b
D)None of the above

Question 20

To make the exchange rate more realistic and to encourage exports and discourage imports, the Rupee was devalued in

A)1991
B)1992
C)1996
D)1998

Question 21

The trade deficit India experienced in 1990-91 was mainly due to

A)High growth rate of exports
B)High growth rate of imports
C)High growth rate of population
D)None of the above

Question 22

The terms of trade measures

A)The terms of exchange between a unit of import and a unit of export
B)The terms of exchange between a unit of one currency with a unit of other currencies
C)The terms of exchange between a unit of one's commodity with a unit of other commodities
D)None of the above

Question 23

Under Liberalized Exchange Rate Management Scheme, how much is the receipts on current account could be converted freely into rupees at market determined exchange rate?

A)30 %
B)40 %
C)50 %
D)60 %

Question 24

Rupee was made convertible for all trade in merchandise in

A)March 1991
B)March 1992
C)March 1993
D)March 1994

Question 25

Rupee is non-convertible in

A)Current account
B)Capital account
C)Both (a) and (b)
D)None of the above