Chapter 28: Balance of Trade and Balance of Payments — Online MCQ Test
COMMERCE · CLASS 11th · Tamil Nadu State Board
Practice Chapter 28: Balance of Trade and Balance of Payments with a free chapter-wise online MCQ test.
This chapter covers: Focusing on international economic indicators this chapter examines Balance of Trade and Balance of Payments accounting. Students analyze current account capital account surplus an....
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Chapter 28: Balance of Trade and Balance of Payments — Important Questions & Answers
What does the Balance of Trade refer to?
- A. Difference between value of exports and imports of goods
- B. Total inflow of capital into the country
- C. Difference between total revenue and total expenditure
- D. The total gold reserve of a country
Answer: A. Difference between value of exports and imports of goods
Balance of Trade is the difference between the monetary value of a nation's exports and imports of tangible goods.
Balance of Trade is the difference between the monetary value of a nation's exports and imports of tangible goods.
Which of the following is considered an 'invisible' item in the Balance of Payments?
- A. Automobiles
- B. Banking and Insurance services
- C. Agricultural machinery
- D. Textile raw materials
Answer: B. Banking and Insurance services
Services like banking, insurance, and shipping are categorized as invisible items in the Balance of Payments.
Services like banking, insurance, and shipping are categorized as invisible items in the Balance of Payments.
Which of the following falls under the Capital Account of the Balance of Payments?
- A. Export of spices
- B. Foreign direct investment
- C. Payment for international tourism
- D. Interest payments on foreign loans
Answer: B. Foreign direct investment
Capital Account includes investments like FDI, FII, and external loans that change assets or liabilities.
Capital Account includes investments like FDI, FII, and external loans that change assets or liabilities.
Analyze the impact: How does an increase in foreign travel by domestic residents affect the current account?
- A. It creates a credit entry
- B. It creates a debit entry
- C. It has no impact
- D. It increases trade surplus
Answer: B. It creates a debit entry
Spending by domestic residents abroad is an import of services, which is recorded as a debit in the current account.
Spending by domestic residents abroad is an import of services, which is recorded as a debit in the current account.
If a country reports a 'Balance of Payments equilibrium', it implies that ____.
- A. Exports equal imports exactly
- B. The net of all current and capital accounts is zero
- C. The country has no foreign debt
- D. Foreign exchange reserves are zero
Answer: B. The net of all current and capital accounts is zero
BOP equilibrium means the total inflows and outflows of foreign currency are balanced when all accounts are summed.
BOP equilibrium means the total inflows and outflows of foreign currency are balanced when all accounts are summed.