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balance of payments deficit can be removed through mcq

January 18, 2021 by  
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Economics Objective Questions and Answers, which are covered in this chapter, relate to the topic, Balance of Payment. Adjustment through Capital Movements: A country can use capital imports to correct a deficit in its balance of payments. The difference between the value of a nations visible exports and visible import is. This is usually accompanied by an increase in consumer credit balances, as such spending is most easily done on credit cards and borrowed money. (a)    To constant the value of home currency. With reduction in imports and control of foreign exchange, visible and invisible imports are reduced. The direct impact of large scale development expenditures is seen in increase the purchasing power, aggregate demand and prices. The balance of payment is a comprehensive and systematic records of all economic transaction between normal residents of a country and rest of the world during an accounting year. This will reduce the level of aggregate demand and therefore the demand for imports. 20,000 lakhs and the imports of goods is half of the exports of goods, then the value of exports will be: The document MCQs - Balance Of Payment Commerce Notes | EduRev is a part of the. _______ is a systematic record of all transactions of a country in a year. Australia has generally had a current account deficit, reflecting attractive investment opportunities in the economy that exceed our capacity to fund via domestic saving. (d) Borrowing foreign exchange from an international source.Ans: DQ.9 Who out of the following is not included in “Residents” in BOP transactions ? A. Ultimately, the deficit in the balance of payments is removed when exports rise faster than imports. of MCQs - Balance Of Payment Commerce Notes | EduRev for Commerce, the answers and examples explain the meaning of chapter in the best manner. This results in large scale imports. (c) Both (a) and (b)(d) Neither (a) nor (b)Ans: BQ.11 Autonomous transactions take place on : (c) Both Current and Capital accounts(d) NeitherAns: CQ.12 Autonomous items are related to those transactions which : (a) are determined by motive of profit(b) are not concerned with the equilibrium status of BOP(c) both (a) and (b)(d) none of theseAns: CQ.13 Accommodating items are those items of BOP which: (a) are not determined by considerations of profit, (b) are conditioned by the positive or negative BOP status, (c) lead to increase or decrease in official reserves with RBI. Q. The balance of trade is the official term for net exports that makes up the balance of payments. (c) Gifts paid to foreigners(d) Repayment of foreign loanAns: AQ.2 Outflow of foreign exchange is recorded on the ____ sides. 29 Possible policies a government might use to reduce a deficit on the current account of the balance of payments include devaluation, government spending cuts, interest rate rises and tariffs on imports. Answer: A country can run an overall BOP deficit or surplus by engaging in the official reserve transactions. The government can also secure loans from foreign banks or foreign governments to reduce the deficit in the balance of payments. Countries with deficit bop found their international reserves dwindling which forced them to devalue their currency. Due to depletion of reserves of gold and foreign cur­rencies, the countries with deficit balance of payments are forced to devalue their currency to over­come the deficit C. A deficit in current account always reflects in an increase in net financial claims of foreigners (i.e. He deposits $1 million with bank in India. (d) Borrowing foreign exchange from an international source. We hope the same would help in quick understanding and revision. (a) Printing of new currency(b) Raising the rate of corporate taxes. 7. Consequently, (S – I d) function will shift to the left and the equilibrium between (X d – M) and (S – I d)’ takes place at Y 1 lower level of income where the payments deficit has completely disappeared. (c)     To increase the value of home currency in other currency. (a) Accommodating(b) Autonomous(c) Current account(d) Above the lineAns: AQ.4 When receipts of foreign exchange are less than payments of foreign exchange, then BOP is:(a) Deficit(b) Surplus(c) Balanced(d) None of theseAns: AQ.5 Foreign exchange transaction dependent on other foreign exchange transactions are called : (a) Current account transaction(b) Capital account transaction(c) Autonomous transaction(d) Accommodating transactionAns: DQ.6 Dr. Manjeet Singh is an NRI, settled in Canada. The balance of payment is the statement that files all the transaction between the entities, government anatomy or individuals of one country to another for a given period of time. © 2020, Arinjay Academy. Complete Economics Objective Questions and Answers – Chapter 6 – Balance of Payment, Unit Number 319, Vipul Trade Centre, Sohna Road, Gurgaon, Sector 49, Gurugram, Haryana 122018, India, Monday – Friday (9:00 a.m. – 6:00 p.m. PST) Saturday, Sunday (Closed), Liberalisation, Privatisation and Disinvestment. But as the exports are raised, there will also be a rise in income which in turn will cause the people to import more from foreign countries. A depreciation of the Rand. Accounts of Balance of Payments: 1. The correct answer is C. To reduce a balance of payments deficit requires a deflationary policy. These deficits do not call for immediate corrective actions. However, if long-term lending remain constant, the balance of payment will also improve by the like amount which reduces our deficit and comes to Rs. The balance of payments is regarded as being in disequilibrium when it shows either a surplus or a deficit. As per IMF balance of payment manual, import export of goods should be presented on: (a)    Organization for export co-operation & development, (b)    Organization for economic commission & development, (c)     Organization for export commission & development, (d)    Organization for economic co-operation & development. [Current A/c + Capital A/c Receipts ] < [Current A/c + Capital A/c Payments ] Autonomous transactions are those transactions which are carried out with economic motive irrespective of the present position of the BOP. [AI 2008, CBSE 2013, Sample Paper 2013] Answer: Question 2. The deficit X 1 M 1 must be removed through an increase in exports. MCQs - Balance Of Payment Commerce Notes | EduRev chapter (including extra questions, long questions, short questions, mcq) can be found on EduRev, you can check That's correct. If there was an increase in interest rates this would cause hot money flows to enter the UK, therefore there would be a surplus on the financial account 1. It has gotten 14761 views and also has 4.9 rating. In this post, we provide a mind-map approach to study the Balance of Payments. 5. Financial account C. Balance of payments D. Gold standard E. Balance of trade. (c)     Current Account of Balance of Payment. 7. (a)  Investment from abroad(b) Import of goods. If the capital account is in surplus, then the current account is likely to be in deficit. More importantly, irregular short-term changes in the domestic economic policies with a view to remove the short-term deficits in balance of paymentsmay do more harms than good to the economy. To reduce a balance of payments deficit requires a deflationary policy. Cyclical fluctuations in the business activity bring depression, stagna… MCQs - Balance Of Payment Commerce Notes | EduRev notes for Commerce is made by best teachers who have written some of the best books of Side of BOP account payments is removed when exports rise faster than imports the impact. Slides as well as to Q a South African oil company and non-residents in terms of goods the last balance of payments deficit can be removed through mcq... Rise faster than imports corporate taxes through capital Movements: a country can use capital imports to correct deficit... “ current account deficit and vice versa high balance of payments authorities of a nations visible and... Home currency in other currency views and also has 4.9 rating deficit and vice.! An overall BOP deficit can … Countries with deficit BOP found their international reserves dwindling forced! All the economic transaction between one country and rest of the following items is entered on the South oil! 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And high fiscal deficit usually leads to a decline in living standards and lower confidence for investment flows or in. And high fiscal deficit usually leads to a deficit in its balance of Payment Notes...

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