Macro

Balance of Payments

Medium

Which of the following statements are true ?

(A) Managed floating is also called dirty floating.

(B) Making domestic currency cheaper by government is called devaluation

(C) Exchange rate determined by the market forces of demand and supply, known as floating exchange rate.

(D) In a fixed exchange rate system, the government fixes the exchange rate.

Choose the correct answer from the options given below :

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

(A), (B) and (C) Only

(A), (B) and (D) Only

(A), (C) and (D) Only

✅ Correct Option: 1

All four statements are correct. (A) Managed floating involves government intervention in a flexible system, also called dirty floating. (B) Devaluation is deliberate reduction of domestic currency value by the government. (C) Floating exchange rate is determined by market forces of demand and supply. (D) In a fixed exchange rate system, the government pegs the rate. Hence all four are true.

2025: 22 May Shift 1

Exchange rate determined by the market forces of demand and supply is also known as...

2022: 30 Aug Shift 2

Match List - I with List - II.

List - I (Concept)	List - II (Meaning)
(A) Trade surplus	(I) Excess of the payments for import of goods over the receipts for export of goods
(B) Devaluation of currency	(II) Excess of exports of goods over the imports of goods
(C) Trade deficit	(III) Fall in the external value of a domestic currency as notified by the government of the country
(D) Balance of trade	(IV) Difference between the value of exports and value of imports of goods of a country

Choose the correct answer from the options given below :

2026: 19 May Shift 2

Arrange the following in correct sequence with respect to the effect on exchange rate under flexible exchange rate system.

A. There is increase in the demand for foreign trips.

B. Depreciation of domestic currency.

C. Higher demand for foreign exchanges.

D. Shift in the demand curve to the right.

Choose the correct sequence from the options given below:

2026: 11 May Shift 1

Which of the following is not a component of current account in balance of payment?

2026: 23 May Shift 1

Identify the correct statements with respect to current account:

A. Balance of trade is the difference between export and import of goods in given period of time.

B. Current account records all international transactions of assets.

C. Trade in services includes factor income and non-factor income transactions.

D. Current account is in balance when capital inflows are equal to capital outflows.

Choose the correct answer from the options given below:

2026: 12 May Shift 1

Arrange the following statements in correct sequence as a result of change in demand for import and its impact on exchange rate;

(A) An increase in exchange rate makes domestic goods cheaper, and increases the exports of domestic country.

(B) There is an increase in the income in the domestic country.

(D) There will be increase in the exchange rate.

Choose the correct answer from the options given below:

Solution

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