Question 1

------------------- system imposes a discipline an monetary authorities&#10;A)Flexible&#10;B)Fixed&#10;C)Bretton wood&#10;D)None of these

Accepted Answer

A fixed exchange rate system imposes discipline on monetary authorities because it requires them to maintain exchange rates within a specific target or band, limiting their ability to adjust monetary policy freely.

Question 2

Speculation is not possible in the case of --------- system&#10;A)Flexible&#10;B)Gold standard&#10;C)Fixed&#10;D)None of these

Accepted Answer

In a fixed exchange rate system, the value of a currency is pegged to another currency or a basket of currencies, limiting the opportunity for speculation since the exchange rate does not fluctuate freely based on market conditions.

Question 3

Increased capital inflows increases ------------------&#10;A)Imports&#10;B)Value of domestic currency&#10;C)Value of foreign currency&#10;D)None of these

Accepted Answer

Increased capital inflows typically lead to an appreciation of the domestic currency as demand for the domestic currency rises when foreign investors convert their currency to invest in the domestic market.

Question 4

Political instability leads to ------------- in the value of that country's currency&#10;A)Decrease&#10;B)Stability&#10;C)Increase&#10;D)None of these

Accepted Answer

Political instability often leads to a decrease in the value of a country's currency because it creates uncertainty about the country's future economic policies and stability, which can deter investment and reduce confidence among investors and the public.

Question 5

-------------- is a social factor that influence the exchange rate&#10;A)War&#10;B)Tourism&#10;C)Changes in preferences&#10;D)None of these

Accepted Answer

The answer of -------------- is a social factor that influence...

Question 6

When exports increase, the supply of foreign currency -----------&#10;A)Increases&#10;B)Decrease&#10;C)Remains constant&#10;D)None of these

Accepted Answer

When exports increase, it means that foreign buyers are purchasing more goods from the exporting country, which requires them to convert their currency into the currency of the exporting country. This process increases the supply of foreign currency in the exchange market.

Question 7

When imports increase, the supply of foreign currency -------------&#10;A)Increase&#10;B)Decrease&#10;C)Remains constant&#10;D)None of these

Accepted Answer

The answer of When imports increase, the supply of foreign...

Question 8

Price index is considered in ---------------- theory of exchange rate determination&#10;A)BOP theory&#10;B)PPP theory&#10;C)Mint Purity theory&#10;D)None of these

Accepted Answer

The Purchasing Power Parity (PPP) theory of exchange rate determination considers the price index as a crucial factor. It suggests that the exchange rate between two currencies will adjust to reflect changes in the price levels of the two countries.

Question 9

Capital outflows leads to increase in the ---------------&#10;A)Supply of foreign currencies&#10;B)Demand for foreign currencies&#10;C)Demand for domestic currency&#10;D)None of these

Accepted Answer

Capital outflows lead to an increase in the demand for foreign currencies as domestic investors convert their domestic currency to foreign currency to invest abroad.

Question 10

A deficit budget leads to ----------------&#10;A)Decrease in the value of domestic currency&#10;B)Increase in the value of domestic currency&#10;C)Stability in the exchange rate&#10;D)None of these

Accepted Answer

A deficit budget typically leads to a decrease in the value of the domestic currency because it often results in increased borrowing and potentially higher inflation, both of which can devalue the currency.

Question 11

Mint parity theory is suitable for ---------&#10;A)Gold standard&#10;B)Paper standard&#10;C)Flexible system&#10;D)None of these

Accepted Answer

The answer of Mint parity theory is suitable for ---------&#10;A)Gold...

Question 12

Forex reserves of a country are held by ---------------------&#10;A)Commercial Banks&#10;B)Central Banks&#10;C)Investment Banks&#10;D)None of these

Accepted Answer

The answer of Forex reserves of a country are held...

Question 13

Extending of economic activities across national boundaries is known as -------------&#10;A)Liberalization&#10;B)Privatization&#10;C)Globalization&#10;D)None of these

Accepted Answer

The answer of Extending of economic activities across national boundaries...

Question 14

The WTO is the successor to -------------&#10;A)VAT&#10;B)GATT&#10;C)GTT&#10;D)ATT

Accepted Answer

The answer of The WTO is the successor to -------------&#10;A)VAT&#10;B)GATT&#10;C)GTT&#10;D)ATT...

Question 15

Central bank is likely to set policies and procedures to keep the exchange rate ------------------&#10;A)Down&#10;B)Stable&#10;C)Up&#10;D)None of these

Accepted Answer

The answer of Central bank is likely to set policies...

Question 16

------------- of a country is the relation over a period between the values of her exports and the values of her imports&#10;A)BOP&#10;B)BOT&#10;C)Budget&#10;D)None of these

Accepted Answer

The answer of ------------- of a country is the relation...

Question 17

Devaluation raised the domestic price of --------------&#10;A)Exports&#10;B)Imports&#10;C)Both exports and imports&#10;D)None of these

Accepted Answer

The answer of Devaluation raised the domestic price of --------------&#10;A)Exports&#10;B)Imports&#10;C)Both...

Question 18

Devaluation reduces the foreign price of --------------&#10;A)Exports&#10;B)Imports&#10;C)Both exports and imports&#10;D)None of these

Accepted Answer

The answer of Devaluation reduces the foreign price of --------------&#10;A)Exports&#10;B)Imports&#10;C)Both...

Question 19

Under gold standard the value of the currency unit was defined in terms of -------------&#10;A)Currencies&#10;B)Silver&#10;C)Gold&#10;D)None of these

Accepted Answer

The answer of Under gold standard the value of the...

Question 20

The ADB was set up in the year&#10;A)976&#10;B)1967&#10;C)1965&#10;D)1966

Accepted Answer

The answer of The ADB was set up in the...

Question 21

The ADB is managed by -------------&#10;A)Director General&#10;B)Managing Director&#10;C)President&#10;D)None of these

Accepted Answer

The answer of The ADB is managed by -------------&#10;A)Director General&#10;B)Managing...

Question 22

Mahalanobis Strategy adopted in the ----------- A)1^st five year plan B)2^nd five year plan C)3^rd five year plan D)4^th five year plan

Accepted Answer

The answer of Mahalanobis Strategy adopted in the ----------- A)1^st five...

Question 23

Euro is a ----------&#10;A)Basket Currency&#10;B)Paper Gold&#10;C)Gold Currency&#10;D)None of these

Accepted Answer

The answer of Euro is a ----------&#10;A)Basket Currency&#10;B)Paper Gold&#10;C)Gold Currency&#10;D)None...

Question 24

The agreement, TRIPs and TRIMs are related to -------------&#10;A)ADB&#10;B)IBRD&#10;C)WTO&#10;D)None of these

Accepted Answer

The answer of The agreement, TRIPs and TRIMs are related...

Question 25

The most popular currencies in the offshore market are -----------&#10;A)Dollar and Yen&#10;B)Dollar and Euro&#10;C)Euro and Yen&#10;D)Euro and Rupee

Accepted Answer

The answer of The most popular currencies in the offshore...

Question 26

The classical theory of international trade was developed by&#10;A)Adam Smith&#10;B)Marshall&#10;C)Keynes&#10;D)None of these

Accepted Answer

The answer of The classical theory of international trade was...

Question 27

Open economies are&#10;A)Dependent&#10;B)Independent&#10;C)Stable&#10;D)None of these

Accepted Answer

The answer of Open economies are&#10;A)Dependent&#10;B)Independent&#10;C)Stable&#10;D)None of these...

Question 28

The settlement of spot transactions takes place within&#10;A)Tree days&#10;B)One day&#10;C)Two days&#10;D)4 days

Accepted Answer

The answer of The settlement of spot transactions takes place...

Question 29

The exchange rates in which the spot transactions are carried out are known as&#10;A)Spot rate&#10;B)ASK rate&#10;C)Bid rate&#10;D)Forward rate

Accepted Answer

The answer of The exchange rates in which the spot...

Question 30

Purchasing Power Purity Theory presents a line between exchange rates and --------&#10;A)Interest rate&#10;B)Inflation&#10;C)BOP&#10;D)None of these

Accepted Answer

The answer of Purchasing Power Purity Theory presents a line...

Question 31

Which is the invisible item in the BOP&#10;A)Machinery&#10;B)Tourist&#10;C)Car&#10;D)None of these

Accepted Answer

The answer of Which is the invisible item in the...

Question 32

Which is the world's largest source of concession assistance&#10;A)IFC&#10;B)IMF&#10;C)IBRD&#10;D)IDA

Accepted Answer

The answer of Which is the world's largest source of...

Question 33

MIGA was established in&#10;A)1978&#10;B)1988&#10;C)1998&#10;D)2008

Accepted Answer

The answer of MIGA was established in&#10;A)1978&#10;B)1988&#10;C)1998&#10;D)2008...

Question 34

Buffer stock financing was introduced by------------&#10;A)IMF&#10;B)IFC&#10;C)IDA&#10;D)IBRD

Accepted Answer

The answer of Buffer stock financing was introduced by------------&#10;A)IMF&#10;B)IFC&#10;C)IDA&#10;D)IBRD...

Deck 4: Global Economy: Exchange Rates, Monetary Policies, and Economic Strategies