Macro

Balance of Payments

Medium

Which of the following is not a source of demand for foreign exchange in India?

Indian investors investing abroad.

Foreign direct investment from abroad.

Import of machines from abroad.

Repayment of loans.

✅ Correct Option: 2

Option 1 -> Indian investors investing abroad requires conversion of INR to foreign currency, creating demand for foreign exchange.

Option 2 -> Foreign direct investment from abroad brings foreign currency INTO India, creating supply of foreign exchange, not demand.

Option 3 -> Import of machines requires payment in foreign currency, creating demand for foreign exchange.

Option 4 -> Repayment of foreign loans requires foreign currency, creating demand for foreign exchange.

Hence, Option 2: Foreign direct investment from abroad -> When foreign investors invest in India, they bring foreign currency into the country and convert it to INR. This creates a supply of foreign exchange in the Indian market, not a demand. Demand for foreign exchange arises only when Indians need to pay abroad (investments abroad, imports, loan repayments, etc.). FDI inflow is a source of foreign exchange earnings for India. -> correct

2025: 3 June Shift 1

Chronologically arrange the following in sequence:

(A) Smithsonian Agreement.

(B) Gold standard system of exchange.

(D) Bretton woods conference.

Choose the correct answer from the options given below:

2026: 15 May Shift 1

Match the LIST-I with LIST-II

LIST-I	LIST-II
A. Third element of BOP	I. Dirty floating
B. Managed Floating	II. Depreciation of domestic currency
C. When the government makes domestic currency cheaper	III. Errors and omissions
D. When the price of foreign currency in terms of domestic currency has increased	IV. Devaluation

Choose the correct answer from the options given below:

2026: 21 May Shift 2

Match the LIST-I with LIST-II

	LIST-I		LIST-II
A.	Open Economy	I.	interacts with other countries through various channels.
B.	Output Market	II.	gives investors the opportunity to choose between domestic and foreign assets.
C.	Financial Market	III.	widens choice that consumers and producers can choose between domestic and foreign goods.
D.	Labour Market	IV.	firms can choose where to locate production and workers to choose where to work.

Choose the correct answer from the options given below:

2023: 11 June Shift 3

When autonomous receipts are less than autonomous payments. The balance of payments is in :

2025: 29 May Shift 2

In the balance of payments, the transactions of bonds and equity shares are placed under which of the following account?

2025: 21 May Shift 1

Under __________ system, the central bank intervenes to buy and sell foreign currencies in an attempt to moderate exchange rate movements whenever they feel that such actions are appropriate.

Which of the following is not a source of demand for foreign exchange in India?

Solution

Related questions:

Keyboard Shortcuts

CUET Economics Past Year Questions (Topic-Wise)