Balance of Payments - Online Test

Q1. If domestic autonomous demand increases by 100, in a closed economy output will increase by
Answer : Option A
Explaination / Solution:
No Explaination.


Q2. If domestic autonomous demand increases by 100, in a open economy output will increase by
Answer : Option D
Explaination / Solution:
No Explaination.


Q3. The balance of payment is a more comprehensive than balance of trade concept. It is
Answer : Option C
Explaination / Solution:
No Explaination.


Q4. Balance of invisibles is the
Answer : Option C
Explaination / Solution:
No Explaination.


Q5. Balance of visibles is the
Answer : Option D
Explaination / Solution:
No Explaination.


Q6. Currency appreciation occurs when
Answer : Option D
Explaination / Solution:
No Explaination.


Q7. When currency becomes less valuable for the Rest of the world, it is called
Answer : Option B
Explaination / Solution:

Currency's value goes up (or down) if the demand for it goes up more (or less) than the supply does. In the short run this can happen unpredictably for a variety of reasons, having to do with trade flows,speculation, or other factors in the international capital market.

Q8. Nominal exchange rate is the price of
Answer : Option B
Explaination / Solution:

The nominal exchange rate is defined as the number of units of the domestic currency that can purchase a unit of a given foreign currency. A decrease in this variable is termed nominal appreciation of the currency.

Q9. Real exchange rate is the price of
Answer : Option B
Explaination / Solution:

Real exchange rate tells how much the goods and services in the domestic country can be exchanged for the goods and services in a foreign country.

Q10. To buy domestic or foreign goods, the more relevant is
Answer : Option D
Explaination / Solution:
No Explaination.