Macro

Balance of Payments

Easy

People demand foreign exchange because:

They want to send gifts abroad

The foreigners send gift in our country

They want to purchase imported goods from our market

The foreigners like to purchase goods from our market

✅ Correct Option: 1

Demand for foreign exchange arises when domestic residents need to make payments in foreign currency. Sending gifts abroad requires converting rupees into foreign currency, which creates demand for foreign exchange. Options 2 and 4 represent supply of foreign exchange, not demand.

2025: 15 May Shift 1

Which of the following is not a merit of the flexible exchange rate system?

2025: 27 May Shift 2

Which among the following is not a direct participant in the foreign exchange market?

2025: 31 May Shift 1

Which of the following are part of Capital account.

(A) Foreign Direct Investment.

(B) Offshore Funds.

(D) Repayment of Loans.

Choose the correct answer from the options given below:

(A), (B) and (D) only
(A), (B) and (C) only
(A), (B), (C) and (D)
(B), (C) and (D) only

2026: 21 May Shift 2

Calculate the current account balance from the information given below:

Exports = 400 crores

Imports = 750 crores

Net Invisibles

Income = - 60 crores

Transfer = 90 crores

2026: 21 May Shift 2

A country's balance of payment account is in surplus when?

2025: 30 May Shift 1

What is the role of official reserve account?

People demand foreign exchange because:

Solution

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