CUET Economics - Macro - Balance Of Payments | Free Questions - Page 3

Q1:

2025: 3 June Shift 1

Macro

>

Balance of Payments

Medium

Which of the following best defines 'Unilateral Transfers' in the context of international transactions?

Funds transferred internationally as loans for a specified tenure and interest rate.

Trade transactions involving goods and services between two countries.

Payments made by one party without expecting any return in the future.

Investments made by a country in the stock market of another country.

Correct Answer

Option 3

Correct Answer

Explanation

Q2:

2025: 3 June Shift 1

Macro

>

Balance of Payments

Medium

The measurement of Balance of Payments deficit is based on ___________ transactions.

Accomodating

Autonomous

Current account

Capital account

Correct Answer

Option 2

Correct Answer

Explanation

Q3:

2025: 2 June Shift 1

Macro

>

Balance of Payments

Medium

Identify the correct reasons that may affect the demand for foreign exchange in an economy.

(A) Import of visibles.

(B) Export of invisibles.

(C) Remittances by residents working abroad.

(D) Purchase of assets abroad.

Choose the correct answer from the options given below:

(A) and (B) only

(B) and (C) only

(C) and (D) only

(A) and (D) only

Correct Answer

Option 4

Correct Answer

Explanation

Q4:

2025: 2 June Shift 1

Macro

>

Balance of Payments

Medium

Which of the following statements is true about autonomous transactions?

BOP is said to be in surplus if autonomous receipts are greater than autonomous payments.

These are also known as below the line items.

These only occur in capital account of BOP.

These items are done to correct the imbalance of BOP.

Correct Answer

Option 1

Correct Answer

Explanation

Q5:

2025: 2 June Shift 1

Macro

>

Balance of Payments

Medium

Arrange the following economic events in chronological order:

(A) Gold was displaced by creating the Special Drawing Rights (SDRs).

(B) The Great Depression.

(C) First World War.

(D) Bretton Woods Conference.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(C), (B), (D), (A)

(B), (A), (D), (C)

(A), (B), (D), (C)

Correct Answer

Option 2

Correct Answer

Explanation

Q6:

2025: 2 June Shift 1

Macro

>

Balance of Payments

Medium

Match List-I with List-II

List-I	List-II
(A) Exchange Rate	(I) Supply of foreign exchange = Demand of foreign currency.
(B) Gold standard system of exchange rate	(II) Domestic currency loses its value in relation to a foreign currency.
(C) Par rate of exchange	(III) External value of the domestic currency.
(D) Currency Depreciation	(IV) An old variant of fixed exchange rate.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 1

Correct Answer

Explanation

Q7:

2025: 2 June Shift 1

Macro

>

Balance of Payments

Easy

Balance of Payments of an economy records.

Income and the expenditure of the government.

Inflow and outflow of the funds of the government.

Inflow and outflow of visible items into/ from the rest of the world.

Inflow/ outflow of foreign exchange to/ from the economy.

Correct Answer

Option 4

Correct Answer

Explanation

Q8:

2025: 31 May Shift 1

Macro

>

Balance of Payments

Medium

Suppose, in a flexible exchange rate system, demand for foreign goods and services increases due to increased international travel by Indians.

Arrange the following statements in correct sequence.

(A) Exchange rate increases.

(B) Exports from India become more affordable for foreigners.

(C) India's income increases by keeping other factors constant.

(D) The demand curve shifts towards the right.

Choose the correct answer from the options given below:

(D), (B), (C), (A)
(D), (C), (B), (A)
(D), (A), (B), (C)
(D), (B), (A), (C)

(D), (B), (C), (A)

(D), (C), (B), (A)

(D), (A), (B), (C)

(D), (B), (A), (C)

Correct Answer

Option 3

Correct Answer

Explanation

Q9:

2025: 31 May Shift 1

Macro

>

Balance of Payments

Medium

Which of the following are part of Capital account.

(A) Foreign Direct Investment.

(B) Offshore Funds.

(C) Portfolio Investment.

(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

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

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

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

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

Correct Answer

Option 3

Correct Answer

Explanation

Q10:

2025: 31 May Shift 1

Macro

>

Balance of Payments

Medium

The Reserve Bank sells foreign exchange when there is a deficit. This move of RBI is known by which of the following?

Official reserve sale.
Balance of payments deficit.
Balance of payments surplus.
Balance of trade.

Official reserve sale.

Balance of payments deficit.

Balance of payments surplus.

Balance of trade.

Correct Answer

Option 1

Correct Answer

Explanation

Q11:

2025: 31 May Shift 1

Macro

>

Balance of Payments

Medium

From the following statements choose the effects of devaluation of domestic currency.

(A) Exchange rate is fixed.

(B) Indian Government increases the exchange rate.

(C) Domestic currency become cheaper.

(D) The Exports of India will rise.

Choose the correct answer from the options given below:

(A), (B), (D), (C).

(A), (B), (C), (D)

(B), (C), (A), (D)

(D), (B), (C), (A).

Correct Answer

Option 2

Correct Answer

Explanation

Q12:

2025: 30 May Shift 2

Macro

>

Balance of Payments

Medium

Under this system, official reserve transactions are not equal to zero.

Fixed Exchange Rate.

Flexible Exchange Rate.

Managed Floating Exchange Rate.

Speculation.

Correct Answer

Option 3

Correct Answer

Explanation

Q13:

2025: 30 May Shift 2

Macro

>

Balance of Payments

Medium

Arrange the following components as per the sample of Balance of Payments for India.

(A) Trade Balance.

(B) Net Invisibles.

(C) Current Account Balance.

(D) Errors and Omissions.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(B), (A), (C), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer

Option 1

Correct Answer

Explanation

Q14:

2025: 30 May Shift 2

Macro

>

Balance of Payments

Easy

Gifts, remittances and grants in current account are the components of ?

Transfer Payments.

Net Factor Income.

Trade in Goods.

Net Non-factor Income.

Correct Answer

Option 1

Correct Answer

Explanation

Q15:

2025: 30 May Shift 2

Macro

>

Balance of Payments

Medium

In modern economies, countries interact through various channels, Which market is not an example of these linkages?

Output Market.

Money Market.

Financial Market.

Labour Market.

Correct Answer

Option 2

Correct Answer

Explanation

Q16:

2025: 30 May Shift 1

Macro

>

Balance of Payments

Easy

Read the passage carefully and answer the question based on the passage:

Balance of Payment is defined as the statement of accounts of a country's inflow and outflows of foreign exchange during a specified period of time. It consists of two main accounts, i.e. Current Account and Capital Account. A deficit or surplus in the current account is determined by the country's exports and imports, whereas the capital account records transactions involving non-financial and financial assets.

India's BOP typically reflects its trade deficit, services surplus and capital inflows. To finance the deficit in its overall BOP, few transactions take place in its official reserves of foreign exchange.

What does capital account of BOP record?

Imports and exports of goods.

Transaction of capital and financial assets.

Income from investment.

Unilateral transfers.

Correct Answer

Option 2

Correct Answer

Explanation

Q17:

2025: 30 May Shift 1

Macro

>

Balance of Payments

Medium

Read the passage carefully and answer the question based on the passage:

Balance of Payment is defined as the statement of accounts of a country's inflow and outflows of foreign exchange during a specified period of time. It consists of two main accounts, i.e. Current Account and Capital Account. A deficit or surplus in the current account is determined by the country's exports and imports, whereas the capital account records transactions involving non-financial and financial assets.

India's BOP typically reflects its trade deficit, services surplus and capital inflows. To finance the deficit in its overall BOP, few transactions take place in its official reserves of foreign exchange.

What is the role of official reserve account?

Records trade in goods.

Reflects errors in data.

Stabilize the currency and manage BOP imbalance.

Attracts foreign investment.

Correct Answer

Option 3

Correct Answer

Explanation

Q18:

2025: 30 May Shift 1

Macro

>

Balance of Payments

Medium

Read the passage carefully and answer the question based on the passage:

Balance of Payment is defined as the statement of accounts of a country's inflow and outflows of foreign exchange during a specified period of time. It consists of two main accounts, i.e. Current Account and Capital Account. A deficit or surplus in the current account is determined by the country's exports and imports, whereas the capital account records transactions involving non-financial and financial assets.

India's BOP typically reflects its trade deficit, services surplus and capital inflows. To finance the deficit in its overall BOP, few transactions take place in its official reserves of foreign exchange.

What could persistent current account deficit lead to?

Currency appreciation.

Increased reserves.

Dependence on foreign borrowings.

Trade surplus.

Correct Answer

Option 3

Correct Answer

Explanation

Q19:

2025: 30 May Shift 1

Macro

>

Balance of Payments

Medium

Read the passage carefully and answer the question based on the passage:

Balance of Payment is defined as the statement of accounts of a country's inflow and outflows of foreign exchange during a specified period of time. It consists of two main accounts, i.e. Current Account and Capital Account. A deficit or surplus in the current account is determined by the country's exports and imports, whereas the capital account records transactions involving non-financial and financial assets.

India's BOP typically reflects its trade deficit, services surplus and capital inflows. To finance the deficit in its overall BOP, few transactions take place in its official reserves of foreign exchange.

What does the BOP record?

Transactions within a country.

Transactions between two countries.

Economic transactions between residents of a country and rest of the world.

Transfers in goods only.

Correct Answer

Option 3

Correct Answer

Explanation

Q20:

2025: 30 May Shift 1

Macro

>

Balance of Payments

Easy

Read the passage carefully and answer the question based on the passage:

Balance of Payment is defined as the statement of accounts of a country's inflow and outflows of foreign exchange during a specified period of time. It consists of two main accounts, i.e. Current Account and Capital Account. A deficit or surplus in the current account is determined by the country's exports and imports, whereas the capital account records transactions involving non-financial and financial assets.

India's BOP typically reflects its trade deficit, services surplus and capital inflows. To finance the deficit in its overall BOP, few transactions take place in its official reserves of foreign exchange.

How can a country reduce the BOP deficit?

Promoting exports and attracting investment.

Increasing imports.

Stopping trade with other countries.

Increasing domestic borrowings.

Correct Answer

Option 1

Correct Answer

Explanation

Q21:

2025: 29 May Shift 2

Macro

>

Balance of Payments

Medium

Central banks intervene to buy and sell foreign currencies in an attempt to moderate exchange rate movements whenever they feel that such actions are appropriate. What is this move called?

Managed floating.

Official reserve transactions.

Balance of payments.

Autonomous and accommodating transactions.

Correct Answer

Option 1

Correct Answer

Explanation

Q22:

2025: 29 May Shift 2

Macro

>

Balance of Payments

Medium

The cost of a bag increased from $8 to$ 12 in the US and ₹ 400 to ₹480 in India. What affect it has on the dollar in respect to exchange price?

Revaluated.

Appreciated.

Depreciated.

Devaluated.

Correct Answer

Option 3

Correct Answer

Explanation

Q23:

2025: 29 May Shift 2

Macro

>

Balance of Payments

Medium

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

Trading Account.

Financial Account.

Current Account.

Errors and Omissions.

Correct Answer

Option 2

Correct Answer

Explanation

Q24:

2025: 29 May Shift 2

Macro

>

Balance of Payments

Medium

If ₹150 is required to buy 2 Dollar, instead of ₹100 earlier, then:

(A) Domestic currency has depreciated.

(B) Domestic currency has appreciated.

(C) The rupee value of the import bill will increase.

(D) Selling foreign exchange from its reserves by the reserve bank of India.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 2

Correct Answer

Explanation

Q25:

2025: 29 May Shift 2

Macro

>

Balance of Payments

Medium

Choose the correct statements from the following in respect of exchange rate system.

(A) Floating Exchange Rate exchange rate is determined by the market forces of demand and supply.

(B) In a fixed exchange rate system, making domestic currency cheaper is called Devaluation.

(C) Increase in exchange rate implies that the price of foreign currency has increased and is called depreciation.

(D) Exchange rates between any two currencies adjust to reflect differences in the price levels in the two countries.

Choose the correct answer from the options given below:

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

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

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

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

Correct Answer

Option 4

Correct Answer

Explanation

Q26:

2025: 29 May Shift 1

Macro

>

Balance of Payments

Medium

Which of the following international transactions are meant to bridge the gap in BOP

Current Account transactions.

Autonomous Transactions.

Accomodating transactions.

All international transactions.

Correct Answer

Option 3

Correct Answer

Explanation

Q27:

2025: 29 May Shift 1

Macro

>

Balance of Payments

Medium

When the exchange rate of foreign currency increases due to managed floating rate it is known as_______.

Devaluation.

Depriciation.

Appreciation.

Revaluation.

Correct Answer

Option 1

Correct Answer

Explanation

Q28:

2025: 29 May Shift 1

Macro

>

Balance of Payments

Medium

Which is not a cause of disequilibrium in Balance of Payment?

Political instability.

Large Imports.

Low Domestic price.

Change in taste and Fashion.

Correct Answer

Option 3

Correct Answer

Explanation

Q29:

2025: 29 May Shift 1

Macro

>

Balance of Payments

Medium

Which of the following transactions will be recorded in the current account of Balance of Payment?

Borrowings from abroad.

Investment to abroad.

Increase in Foreign Exchange reserves.

Factor Income receipt from abroad.

Correct Answer

Option 4

Correct Answer

Explanation

Q30:

2025: 29 May Shift 1

Macro

>

Balance of Payments

Medium

Arrange the following in ascending order according to their year of implementation

(A) The Smithsonian Agreement.

(B) First World War.

(C) Introduction of Liberalized Exchange Rate Management System.

(D) The Bretton Woods Conference.

Choose the correct answer from the options given below:

(B), (D), (A), (C)

(A), (C), (B), (D)

(B), (A), (D), (C)

(C), (B), (D), (A)

Correct Answer

Option 1

Correct Answer

Explanation

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