Macro

Balance of Payments

Medium

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:

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

A-II, B-I, C-III, D-IV

A-I, B-II, C-III, D-IV

A-I, B-II, C-IV, D-III

A-III, B-I, C-IV, D-II

✅ Correct Option: 4

Errors and omissions form the third element of the BoP, capturing recording gaps (A-III). Managed floating is also called dirty floating (B-I). A deliberate government action making domestic currency cheaper under a fixed regime is devaluation (C-IV). A market-driven rise in the price of foreign currency is depreciation of the domestic currency (D-II).

2022: 19 July Shift 2

The likely impact of a depreciation of the domestic currencies of the South East Asian Countries on exports to the US would be :

2026: 19 May Shift 2

Choose the correct statement regarding components of Balance of Payment.

2023: 28 May Shift 2

Current Account components of trade in services include :

(A) Gifts, Remittances

(B) Net Non-Factor Income

(D) Grants

Choose the correct answer from the options given below :

2026: 11 May Shift 2

Match the LIST-I with LIST-II

LIST-I	LIST-II
A. Flexible Exchange Rate System	I. Central banks intervene to buy and sell foreign currencies
B. Fixed Exchange Rate System	II. Exchange rate determine by market forces
C. Managed Floating Exchange Rate System	III. It reflects differences in the price levels in the two countries
D. Purchasing Power (PPP) theory	IV. The exchange rate set by the Government

Choose the correct answer from the options given below:

2025: 16 May Shift 1

In a situation of Balance of payments deficit, which of the following will be true?

2026: 13 May Shift 1

Arrange the following steps in correct order with respect to change in exchange rate:

(A) Demand for foreign goods and services increases.

(B) It leads to a shift in the demand curve upward.

(D) The value of currency will fall in respect of foreign currency.

Choose the correct answer from the options given below:

Solution

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