This quiz works best with JavaScript enabled. Home > Economics > International > Bop > Balance Of Payments – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Balance Of Payments Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the difference between the value of exports and value of imports of goods called? A) Disequilibrium. B) Balance of payments. C) Foreign exchange. D) Balance of Trade. Show Answer Correct Answer: D) Balance of Trade. 2. If the US dollar appreciates relative to the Japanese yen, then A) Fewer yen will be required to purchase on dollar. B) The dollar has weakened relative to the yen. C) The Japanese supply of yen will increase. D) More yen will be required to purchase one dollar. Show Answer Correct Answer: D) More yen will be required to purchase one dollar. 3. A Chinese firm export goods to Australia-this is recorded in Australia's BoP as A) A debit entry in Current a/c (Goods). B) Credit entry in Capital a/c. C) Credit entry in Current a/c (Goods). D) Credit entry in Current a/c (Services). Show Answer Correct Answer: A) A debit entry in Current a/c (Goods). 4. Invisible items includes A) Capital. B) Goods. C) Services. D) All. Show Answer Correct Answer: C) Services. 5. Why may a government seek to reduce a current account surplus on the balance of payments?(Winter 2013) A) C to raise the economic growth rate. B) B to lower unemployment. C) D to raise the exchange rate. D) A to lower inflation. Show Answer Correct Answer: D) A to lower inflation. 6. What would be the best policy for a country to reduce a balance of payments deficit?(Winter 2016) A) A an increase in interest rates. B) C a reduction in direct taxes. C) B an increase in the exchange rate. D) D a reduction in subsidies to domestic industry. Show Answer Correct Answer: B) C a reduction in direct taxes. 7. Which of the following is not a part of current account A) Export of goods. B) Imports of services. C) Grants and gifts. D) FDI. Show Answer Correct Answer: D) FDI. 8. A potential problem with free floating exchange is that A) Exchange rates may never reach equilibrium. B) The currency markets may become monopolised. C) Uncertainty in exchange rate fluctuations can hinder trade. D) None of above. Show Answer Correct Answer: C) Uncertainty in exchange rate fluctuations can hinder trade. 9. Currency appreciation could be caused by A) Supply Increase or Demand Increase. B) Supply Increase or Demand Decrease. C) Supply Decrease or Demand Decrease. D) Supply Decrease or Demand Increase. Show Answer Correct Answer: D) Supply Decrease or Demand Increase. 10. Balance of Payment is a systematic record of all economic transactions A) Between residents of the country and residents of rest of the world. B) Within a country. C) Involving imports and exports of services. D) Where physical goods are transferred across international boundaries. Show Answer Correct Answer: A) Between residents of the country and residents of rest of the world. 11. An example of direct investment is A) Overseas borrowings by the Electricity commission. B) The purchase of westpac shares by an overseas resident. C) The establishment of a foreign bank in Australia. D) A loan raised overseas by the Australian Government. Show Answer Correct Answer: D) A loan raised overseas by the Australian Government. 12. ..... is a system in which the Central Bank allows the exchange rate to be determined bymarket forces but intervenes at times to influence the rate. A) Fixed exchange rate. B) Floating exchange rate. C) Managed floating exchange rate. D) Free exchange rate. Show Answer Correct Answer: C) Managed floating exchange rate. 13. The NZ government sells $ 4 million worth of Treasury bonds to a Chinese investor. This would be recorded as A) Current account. B) Financial/capital account. C) Official reserves account. D) None of above. Show Answer Correct Answer: B) Financial/capital account. 14. In which account are direct foreign investments included A) Capital account. B) Current account. C) Both. D) Budget. Show Answer Correct Answer: A) Capital account. 15. Which policy would reduce a balance of payments deficit on the current account in the short run? (Winter 2004) A) C a rise in direct taxation. B) D incentives to attract foreign capital. C) B a reduction in the rate of interest. D) A a reduction in government subsidies to exporters. Show Answer Correct Answer: A) C a rise in direct taxation. 16. BMW pays $ 1 million to a U.S. shipper to transport cars from Germany to the Brazil. A) Financial Account/Debit/Deficit. B) Current Account/Credit/Surplus. C) Financial Account/Credit/Surplus. D) Current Account/Debit/Deficit. Show Answer Correct Answer: B) Current Account/Credit/Surplus. 17. The sale of a Mercedes-Benz from Germany to France would be recorded as a merchandise export in the ..... account of Germany's balance of payments. A) Current. B) Official reserves. C) Export. D) Capital. Show Answer Correct Answer: A) Current. 18. Which of the following is NOT part of the Financial Account of the BOP? A) Net foreign direct investment. B) Net import/export of services. C) Other Financial items. D) Net portfolio investment. Show Answer Correct Answer: B) Net import/export of services. 19. Price of one currency in relation to other currencies in the international market is known as: A) Equilibrium rete. B) Exchange rate. C) Flexible exchange rate. D) Fixed exchange rate. Show Answer Correct Answer: B) Exchange rate. 20. A Mexican & mining company purchases USA made tractors & excavators. This will get recorded in the Mexican BoP as, A) Capital ac outflow. B) Invisible balance outflow. C) Visible balance inflow. D) Visible balance outflow. Show Answer Correct Answer: D) Visible balance outflow. 21. The ..... records the levels of gold, convertible currencies, special drawing rights, and reserve positions at the IMF held by a national government. A) Debt account. B) Current account. C) Official reserves account. D) Capital account. Show Answer Correct Answer: C) Official reserves account. 22. The ..... records exports and imports of goods and services, investment income, and gifts. A) Official reserves account. B) Capital account. C) Debt account. D) Current account. Show Answer Correct Answer: D) Current account. 23. Current account records transactions relating to A) Export and import of goods. B) Non-factor and factor income. C) Current transfer. D) All of these. Show Answer Correct Answer: D) All of these. 24. If the economy is at full employment, which might be the effect of an increase in exports? A) Higher employment. B) Higher deflation. C) Higher inflation. D) An increase in spare capacity. Show Answer Correct Answer: C) Higher inflation. 25. International trade enables a country like Australia to A) Produce beyond its production possibility frontier. B) Increase its production of goods for domestic consumption. C) Reduce its own production levels and buy cheaper imports. D) Expand its consumption possibilities. Show Answer Correct Answer: D) Expand its consumption possibilities. 26. The structural component of Australia's Current Account Deficit (CAD) is A) The net income deficit. B) The trade balance. C) The fact that we spend too much on imports. D) None of above. Show Answer Correct Answer: A) The net income deficit. 27. South African tourists buy a few Gucci handbags from Italy. A) Credit in SA current account. B) Credit in SA capital a/c. C) Debit in SA current account. D) Debit in SA capital a/c. Show Answer Correct Answer: C) Debit in SA current account. 28. Hedging is possible in: A) Spot market. B) Forward market. C) Managed floating market. D) None of these. Show Answer Correct Answer: B) Forward market. 29. An undervalued currency encourages A) Exports. B) Imports. C) Current account deficit. D) None of above. Show Answer Correct Answer: A) Exports. 30. What is difference between the value of exports of goods and value of imports of goods called A) Balance of payment. B) Balance of trade. C) Disinvestment. D) All of these. Show Answer Correct Answer: B) Balance of trade. ← PreviousNext →Related QuizzesInternational QuizzesEconomics QuizzesBalance Of Payments Quiz 1Balance Of Payments Quiz 3Balance Of Payments Quiz 4Balance Of Payments Quiz 5Balance Of Payments Quiz 6Balance Of Payments Quiz 7 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books