Chapter Exam

Chapter 28: Balance of Trade and Balance of Payments — Online MCQ Test

Q: Which of the following is considered an 'invisible' item in the Balance of Payments?

Answer: B. Banking and Insurance services — Services like banking, insurance, and shipping are categorized as invisible items in the Balance of Payments.

Q: Which of the following falls under the Capital Account of the Balance of Payments?

Answer: B. Foreign direct investment — Capital Account includes investments like FDI, FII, and external loans that change assets or liabilities.

Q: Analyze the impact: How does an increase in foreign travel by domestic residents affect the current account?

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.

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 for Tamil Nadu State Board CLASS 11th COMMERCE. 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.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 28: Balance of Trade and Balance of Payments — Important Questions & Answers (FAQ)

Frequently asked questions from Tamil Nadu State Board CLASS 11th COMMERCE — Chapter 28: Balance of Trade and Balance of Payments, with answers and explanations. These are sample questions; the exam has its own separate question set.

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.

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.

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.

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.

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.

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