This quiz works best with JavaScript enabled. Home > International > Bop > Balance Of Payments – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Balance Of Payments Quiz 3 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. 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. 2. 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. 3. An example of direct investment is A) A loan raised overseas by the Australian Government. B) The establishment of a foreign bank in Australia. C) Overseas borrowings by the Electricity commission. D) The purchase of westpac shares by an overseas resident. Show Answer Correct Answer: A) A loan raised overseas by the Australian Government. 4. ..... 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) Managed floating exchange rate. C) Floating exchange rate. D) Free exchange rate. Show Answer Correct Answer: B) Managed floating exchange rate. 5. 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. 6. 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. 7. Which policy would reduce a balance of payments deficit on the current account in the short run? (Winter 2004) A) A a reduction in government subsidies to exporters. B) B a reduction in the rate of interest. C) C a rise in direct taxation. D) D incentives to attract foreign capital. Show Answer Correct Answer: C) C a rise in direct taxation. 8. BMW pays $ 1 million to a U.S. shipper to transport cars from Germany to the Brazil. A) Current Account/Credit/Surplus. B) Financial Account/Debit/Deficit. C) Current Account/Debit/Deficit. D) Financial Account/Credit/Surplus. Show Answer Correct Answer: A) Current Account/Credit/Surplus. 9. 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) Capital. B) Current. C) Official reserves. D) Export. Show Answer Correct Answer: B) Current. 10. 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) Net portfolio investment. D) Other Financial items. Show Answer Correct Answer: B) Net import/export of services. 11. Price of one currency in relation to other currencies in the international market is known as: A) Equilibrium rete. B) Fixed exchange rate. C) Exchange rate. D) Flexible exchange rate. Show Answer Correct Answer: C) Exchange rate. 12. A Mexican & mining company purchases USA made tractors & excavators. This will get recorded in the Mexican BoP as, A) Visible balance inflow. B) Visible balance outflow. C) Invisible balance outflow. D) Capital ac outflow. Show Answer Correct Answer: B) Visible balance outflow. 13. The ..... records the levels of gold, convertible currencies, special drawing rights, and reserve positions at the IMF held by a national government. A) Current account. B) Capital account. C) Debt account. D) Official reserves account. Show Answer Correct Answer: D) Official reserves account. 14. The ..... records exports and imports of goods and services, investment income, and gifts. A) Current account. B) Capital account. C) Debt account. D) Official reserves account. Show Answer Correct Answer: A) Current account. 15. 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. 16. If the economy is at full employment, which might be the effect of an increase in exports? A) Higher inflation. B) Higher deflation. C) Higher employment. D) An increase in spare capacity. Show Answer Correct Answer: A) Higher inflation. 17. Surplus in BOP occurs when A) Receipts = payments. B) Receipts < payments. C) Receipts > payments. D) All the time. Show Answer Correct Answer: C) Receipts > payments. 18. 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. 19. 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. 20. South African tourists buy a few Gucci handbags from Italy. A) Credit in SA current account. B) Debit in SA current account. C) Credit in SA capital a/c. D) Debit in SA capital a/c. Show Answer Correct Answer: B) Debit in SA current account. ← PreviousNext →Related QuizzesInternational QuizzesBalance Of Payments Quiz 1Balance Of Payments Quiz 2Balance Of Payments Quiz 4Balance Of Payments Quiz 5Balance Of Payments Quiz 6Balance Of Payments Quiz 7Balance Of Payments Quiz 8Balance Of Payments Quiz 9Balance Of Payments Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books