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BALANCE OF PAYMENTS ACCOUNTS, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , i, MULTIPLE CHOICE QUESTIONS, Sr. Questions: Learning, No. Objective, 1 | BOP is a systematic record of all .... -«.» between residents of a Knowledge, country and rest of the world. Understanding, (A) Financial statements, (B) Economic transactions, (C) Both (A) and (B), (D) None of these, 2 Which of the following is not being included in the BOP account? Understanding, (A) Visible transactions between residents and rest of the world Application, (B) Invisible transactions between people of Bihar and West Bengal Analysis, (C) Visible transactions between India and Nepal, (D) Unilateral transactions between India and World Bank., 3 Calculate the current account balance from the following information; Application, Particulars Rs. in crore) Analysis, i. Exports of visible items 125, ii. Imports of invisible items 70, iii, Imports of visible items 90, iv. Exports of invisible items 95, v. Gifts and transfers from rest of the world 25, Choose the correct alternative:, (A) Rs.85, (B) Rs. (-)85, (C) Rs. 75, (D)Rs. 95, 4 State which of the following transactions will be recorded on credit side of | Understanding, BOP. Application, , (A) Indian Government repays loan taken from IMF,

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(B) Acquisition of a foreign company by TATA, (C) Purchase of shares of Infosys by a Japanese resident., , , , , , , , , , , , , , , , , , (D) Purchase of toys from china,, , Which of the following is not a component of Capital account of BOP? Evaluation, (A) Foreign direct investment Understanding, (B) Borrowings from Japan, (C) Change in foreign exchange reserve, (D)One sided transfers, , Autonomous transactions of BOP take place O9...........20--.s00- Knowledge, (A) Capital account Understanding, (B) Current account, (C) Both (A) and (B), , (D)None of these, , Which of the following is an example of Accommodating transactions of Knowledge, , BOP? Understanding, (A) Merchandise exports and imports of goods and services Evaluation, (B) Foreign investment in India with the aim of earning profit., , (C) Receipts and Repayments of long-term loans by private individuals., (D) Foreign exchange reserves maintained by RBI., Match the statements given in the column | with the correct options given | Knowledge, in column II. Understanding, Column I Column II Evaluation, a. Balance of trade i. Capital account Application, b. Current account ii. Balance of visible items Analysis, c. Below the line items iii, Includes both visible and, , invisible items, , , , d. Borrowings from World iv, Accommodating items, Bank, , Choose the correct alternative:, , (A)a~ i, b = ii, ¢ ~ iii, d~ iv, , , , , , , , , , (B)a— ii, b— iti, c—iv,d-i, (C)a-i, b - iii, c - ii, d-iv

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(D)a ii, b - iv, c - iii, d-i, , , , 10, , Imports of machinery are recorded in the... Account and, borrowings are recorded in the............... Account., , (A) Current, Capital, , (B) Capital, Capital, , (C) Capital, Current, , (D) Current, Current, , | Unilateral transfers are:, , (A) one-sided payments, (B) receipts < payments, (C) factor incomes, , (D) both (A) and (C), , Understanding, Evaluation, , Understanding, , , , 11, , Current account records transactions relating to:, (A) export and import of goods, (8) non-factor and factor income, (C) current transfers, {D) all of these, , Understanding, , , , 12, , Balance of trade is measured as:, (A) difference between import and export of goods, (8) difference between import and export of services, (C) difference between import and export of capital, (D) difference between all exports and all imports, , Understanding, Application, Analysis, , , , 13, , Foreign Direct Investment from abroad are recorded on the:, {A) Credit side of Current Account, (8) Debit side of Current Account, (C) Credit side of Capital Account, (D) Debit side of Capital Account, , Understanding, Application, , , , , , 14, , Current Account Surplus arises when credit items are. debit, items., , (A) Less than, , (B) Equal to, , , , Understanding, Application, Analysis

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(C) More than, (D) All the above, , , , , , 15, , If the value of visible exports exceeds the value of visible imports, the, balance relates to:, , (A) current account BOP, , (B) capital account BOP, , (C) balance of trade, , (D) none of these, , Understanding, Application, Analysis, , , , , , ii, | ASSERTION AND REASON TYPE QUESTIONS:, , , , Question:, , Assertion (A): Indians Investing in assets abroad will be recorded under, debit side of capital account in Balance of Payments.”, Reason (R): Indians investing in assets abroad will lead to an outflow of, foreign currency; it will be recorded under debit side of capital account in, balance of payments., (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the, correct explanation of Assertion (A)., (8) Both Assertion (A) and Reason (R) are true but Reason (R) is not the, correct explanation of Assertion (A), (C) Assertion (A) is true but Reason (R) false., (0) Assertion (A) is false but Reason (R) is true., , Learning, Objective, Application, Analysis, , , , , , 17, , , , Assertion (A): A country with trade deficit cannot have current account, surplus in its Balance of Payments., Reason (R): Trade deficit occurs when value of goods / visible imported is, more than the value of goods / visible exported. Current Account Surplus in, this situation will arise when the deficit on trade account is less than the, surplus on account of invisibles., , {A) Both Assertion (A) and Reason (R) are true and Reason (R) is the, , correct explanation of Assertion (A)., , Application, Analysis

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18, , {B) Both Assertion (A) and Reason (R) are true but Reason (R) is not the, correct explanation of Assertion (A), {C) Assertion (A) is true but Reason (R) false., (D) Assertion (A) is false but Reason (R) is true., Assertion (A): Trade deficit is always a great cause of worry for an, economy,, Reason (R): Trade deficit is a lesser cause of worry if it reflects a rise in, investment which will build the capital stock and increase the future output, in an economy., (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the, correct explanation of Assertion (A),, (8) Both Assertion (A) and Reason (R) are true but Reason (R) is not the, correct explanation of Assertion (A), (C) Assertion (A) is true but Reason (R) false., (BD) Assertion (A) is false but Reason (R) is true., , Application, , Analysis, , , , 19, , Assertion (A): ‘Make in India’ Programme will have favourable effect on, Balance of Payments position of India., Reason (B): 'Make in India’ will increase supply (inflow) of foreign, exchange in India, causing improvement in the balance of payment position., (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the, correct explanation of Assertion (A)., , (8) Both Assertion (A) and Reason (R) are true but Reason (R) is not the, correct explanation of Assertion (A), , (C) Assertion (A) is truc but Reason (R) false., , (D) Assertion (A) is false but Reason (R) is true., , Application, Analysis, , , , , , 20, , , , Assertion (A): ‘Import of Pulses’ will have favourable effect on Balance of, Payments position of India., Reason (R): Import of pulses will lead to outflow of foreign exchange from, the country, causing adverse effect on balance of payment position., (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the, correct explanation of Assertion (A)., (B) Both Assertion (A) and Reason (R) are true but Reason (R) is not the, , , , Application, , Analysis