Foreign Trade

Q1. With reference to transfer payments, which one of the following statements is/are correct?
1. Transfer payments are receipts which the residents of a country receive without having to make any payments in return
2. The official remittances, gifts and grants are not part of transfer payments
a) 1 only
b) 2 only
c) both 1 and 2
d) Neither 1 nor 2

Q2. With reference to Trade-inservices, which one of the following statements is/are not correct?
1. Trade-in-services are also called invisibles because they are not seen to cross borders
2. Net income from software exports is a part of trade-inservices
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

Q3. What is current account deficit on Current account balance ?
a) negative on account of trade
b) negative on account of invisibles
c) negative on account of net transfer
d) negative on account of trade, invisibles and net transfers

Q4. What is balance of payment deficit?
a) Deficit on account of trade plus invisibles
b) Deficit on account of trade plus capital account
c) Decrease in official reserves
d) Increase in official reserves

Q5. When do an economy generally adopt cheap money policy?
a) Inflation
b) Recession
c) Deflation
d) Market failure

Q6. What do you understand by ‘Hot money’?
a) Currency whose value fluctuate frequently
b) Currency whose value falls frequently
c) Currency which commands high value in International market
d) Currency which has tendency to fly out of the country

Q7. Which of the following components ia/are included in a country’s foreign exchange reserve?
1. Gold stock of RBI
2. Foreign Exchange Assets of RBI
3. SDR holding of the country at IMFCodes:
a) 1 and 2
b) 2 and 3
c) 1 and 3
d) All of these

Q8. The balance of payment of a country is a systematic record of: (UPSC- 2013)
a) All import and export transactions of a country during a given period of time, normally a year
b) Goods exported from a country during a year
c) Economic transactions between the government of one country to another
d) Capital movements from one country to another

Q9. What is a paper gold? (UP Civil Services Exam-2002)
a) Special accommodation facility of IMF
b) Currencies still on gold standard
c) SDR of IMF
d) Deficit financing

1. a
2. d
3. d
4. c
5. b
6. d
7. d
8. a
9. c

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