CBSE Class 12 (Commerce) Open Economy Macroeconomics — practice questions
70 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice CBSE Class 12 (Commerce) Open Economy Macroeconomics in the app →The balance of payments records a country's transactions with whom?Trade in goods and services plus transfer payments are recorded in which account?Receipts that residents get for free, without supplying goods or services, are called what?Which of these is a transfer payment in the current account?The balance of trade is the difference between exports and imports of what?In the balance of trade, how is the export of goods entered?A trade deficit arises when a country does what?Which group of flows is covered by invisibles in the current account?A surplus on the current account means the nation is what?Which of these is a non-factor service within invisibles?Net international earnings on labour, land and capital are called what?On the capital account, buying a foreign asset is entered as what?Shares of an Indian firm sold to a Chinese buyer are entered how in the capital account?Capital account surplus arises when capital inflows are greater than what?Which of these is a capital inflow?A current account deficit must be financed by what, in an equilibrium BoP?Without reserve movements, current account plus capital account equals what?In a BoP deficit, what does the reserve bank do with foreign exchange?A decrease in official reserves is called an overall BoP what?Who are the ultimate financiers of any deficit in the balance of payments?Which BoP item reflects the difficulty of recording every international transaction?Official reserve transactions matter more under which exchange rate regime?Transactions made for profit, independent of the BoP position, are called what?Which transactions are determined by the gap in the balance of payments?Which BoP item is treated as the accommodating item?Under the IMF's BPM6 format, the BoP has which three accounts?Under the new classification, trade in bonds and equity shares is placed in which account?India exports goods worth 150 and imports goods worth 240 (million USD). The trade balance is what?A trade balance of -90 and net invisibles of +52 give a current account balance of what?The price of one currency in terms of another is called what?If you pay Rs 50 to get $1, the exchange rate is quoted as what?Which reason creates a demand for foreign exchange?Which transaction raises the supply of foreign exchange to a country?Why does demand for foreign exchange fall when its price rises?Which is a way of determining a currency's exchange rate?A flexible exchange rate is determined by what?A flexible exchange rate is also known by which other name?In a completely flexible system, what do central banks do in the forex market?The rate moves from Rs 50 to Rs 70 per dollar. The rupee has what?Fewer rupees are needed to buy one dollar in a flexible regime. The rupee has what?A country whose aggregate demand grows faster than the world's usually sees what?Higher domestic interest rates, other things equal, often lead to what for the home currency?Equally safe bonds pay 8 per cent in country A and 10 per cent in B. The interest rate differential is what?Which theory predicts long-run exchange rates in a flexible exchange rate system?A shirt costs $8 in the US and Rs 400 in India. PPP implies a rate of what?A Rs 400 Indian shirt rises 20 percent, a $8 US shirt rises 50 percent. PPP rate becomes what?A rate of Rs 30 per dollar in 2010; prices double in India, fixed in USA. PPP rate in 2030?A higher real exchange rate R makes foreign goods relatively what?Under a fixed exchange rate system, who sets the exchange rate?The government fixes Rs 70 per dollar against a market Rs 50. What must the RBI do?Aggressive buying of one currency that forces a government to devalue is called what?What is a major advantage of flexible exchange rates for the BoP?Why do flexible rates give countries more freedom in monetary policy?Why may inadequate reserves weaken a fixed exchange rate?Fixed rates faced speculative attacks before the collapse of which system?Managed floating is also called what?Under managed floating, official reserve transactions are what?Managed floating mixes which two systems?In an open economy, national income Y equals C + I + G plus what?The marginal propensity to import is the fraction of an extra rupee of income spent on what?If imports are M = 60 + 0.06Y, what is the marginal propensity to import?With c = 0.8 and m = 0.05, the open economy multiplier 1/(1 - c + m) equals what?Given C = 40 + 0.8(Y - T), T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y, find Y.At equilibrium income of 560 with X = 90 and M = 50 + 0.05Y, net exports equal what?Why is the open economy multiplier smaller than the closed economy one?By the BoP identity, a current account surplus is balanced by what?A BoP crisis occurs when a nation cannot do what?Ben Bernanke's 2005 paper blamed BoP imbalances mainly on which factor?In BoP accounts, how are receipts from abroad and payments to abroad recorded?A stronger home currency makes imports cheaper and tends to do what to a current account surplus?