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Test: Sector-wise Trends and Issues- 2 - B Com MCQ


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10 Questions MCQ Test Indian Economy - Test: Sector-wise Trends and Issues- 2

Test: Sector-wise Trends and Issues- 2 for B Com 2024 is part of Indian Economy preparation. The Test: Sector-wise Trends and Issues- 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Sector-wise Trends and Issues- 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Sector-wise Trends and Issues- 2 below.
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Test: Sector-wise Trends and Issues- 2 - Question 1

Which of the following statements accurately describes the role of foreign trade in economic development?

Detailed Solution for Test: Sector-wise Trends and Issues- 2 - Question 1
Foreign trade plays a crucial role in economic development by allowing countries to specialize in producing goods in which they have a comparative advantage. This specialization leads to increased production efficiency, higher economic growth, and improved living standards. Countries can trade their surplus products with other nations, leading to market expansion and greater utilization of resources. This approach fosters competition, innovation, and the efficient allocation of resources.
Test: Sector-wise Trends and Issues- 2 - Question 2

What is the primary purpose of the Balance of Trade?

Detailed Solution for Test: Sector-wise Trends and Issues- 2 - Question 2
The Balance of Trade specifically focuses on recording the imports and exports of goods in a country. It helps to determine whether a country is exporting more than it is importing (trade surplus) or importing more than it is exporting (trade deficit). This information is crucial for understanding a country's economic position in terms of its international trade in tangible goods.
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Test: Sector-wise Trends and Issues- 2 - Question 3

Which of the following statements is true about the Balance of Payments?

Detailed Solution for Test: Sector-wise Trends and Issues- 2 - Question 3
The Balance of Payments covers a broader range of transactions than the Balance of Trade. It includes both tangible items (goods) and intangible items (services and income) that a country engages in with the rest of the world. In addition to recording imports and exports, the Balance of Payments also considers various forms of financial flows, capital transfers, and international investment.
Test: Sector-wise Trends and Issues- 2 - Question 4
What is the primary goal of fiscal policy?
Detailed Solution for Test: Sector-wise Trends and Issues- 2 - Question 4
The primary goal of fiscal policy is to influence the overall demand and supply for goods and services in the economy. This is achieved through the government's use of taxation and expenditure policies. By adjusting these policies, the government aims to achieve economic stability, reduce unemployment, and promote economic growth.
Test: Sector-wise Trends and Issues- 2 - Question 5
What happens when a country's Balance of Trade shows a trade surplus?
Detailed Solution for Test: Sector-wise Trends and Issues- 2 - Question 5
When a country's Balance of Trade shows a trade surplus, it means that the country is exporting more goods than it is importing. This situation can indicate a healthy economic position, as it suggests that the country is producing goods that are in demand internationally. A trade surplus can lead to increased foreign exchange reserves and a strengthened national currency.
Test: Sector-wise Trends and Issues- 2 - Question 6
What is the main focus of monetary policy?
Detailed Solution for Test: Sector-wise Trends and Issues- 2 - Question 6
The main focus of monetary policy is to bring price stability and control inflation within the economy. By regulating the money supply, interest rates, and credit conditions, the central bank aims to ensure that prices remain relatively stable and that inflation is kept at manageable levels.
Test: Sector-wise Trends and Issues- 2 - Question 7
Which authority administers monetary policy in a country?
Detailed Solution for Test: Sector-wise Trends and Issues- 2 - Question 7
Monetary policy is administered by the central bank of a country. The central bank has the responsibility of controlling and regulating the money supply in the economy to achieve various economic objectives, such as price stability, controlling inflation, and fostering economic growth.
Test: Sector-wise Trends and Issues- 2 - Question 8
Which policy tool is NOT a part of fiscal policy?
Detailed Solution for Test: Sector-wise Trends and Issues- 2 - Question 8
Interest rates are not a part of fiscal policy; they are a tool of monetary policy. Fiscal policy primarily involves adjusting tax rates and government spending to influence the economy, while monetary policy uses interest rates and credit ratios to regulate the money supply and credit flow.
Test: Sector-wise Trends and Issues- 2 - Question 9
What is the main difference between fiscal policy and monetary policy?
Detailed Solution for Test: Sector-wise Trends and Issues- 2 - Question 9
The main difference between fiscal policy and monetary policy lies in the tools and methods used to achieve their respective goals. Fiscal policy involves using taxation and government spending to influence the economy, while monetary policy uses tools like interest rates, reserve requirements, and open market operations to regulate the money supply and credit conditions.
Test: Sector-wise Trends and Issues- 2 - Question 10
What is the primary purpose of the Capital Account in the Balance of Payments?
Detailed Solution for Test: Sector-wise Trends and Issues- 2 - Question 10
The primary purpose of the Capital Account in the Balance of Payments is to keep a record of financial inflows and outflows related to foreign investments. This includes transactions like foreign direct investment, external commercial borrowing, government loans to foreign governments, and other capital transfers. The Capital Account provides insights into a country's international financial relationships and the movement of capital across borders.
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