Scanner Chapter 14 - Balance of Payment, Macro Economics | Economics Class 12 - Commerce PDF Download

C.B.S.E QUESTIONS

(Q1) State any four items each of current and capital account of BOP.

(Q2) Distinguish between current and capital account of BOP account ? Mention any two transaction of capital account ?

(Q3) State true or false
(a) Excess of foreign exchange receipts over foreign exchange payments on account of accommodating transactions equals deficit in the balance of payments
(b) Export and Import of machines are recorded in capital account of the BOP
(c) Foreign investment are recorded in the capital account of BOP

Ans. F , F, T

(Q4) When will there be a surplus in balance of trade ?

(Q5) Which two transactions determine Balance of Trade or Merchandise?

(Q6) What is difference between value of export of goods and value of import of goods called ?

(Q7) Distinguish between visible and invisible trade ? Give two example of each

(Q8) What does BOP account record ?

(Q9) What is balance of visible item in BOP called ?

(Q10) BOT (merchandise) is - 400 cr and value of export is 300 cr . Find value of Import.

(Q11) BOT (merchandise) deficit is 5000 cr and value of import is 9000 cr . Find value of export.

(Q12) BOT (merchandise) deficit is 300 cr and value of export is 500 cr . Find value of Import.

(Q13) Name the main components of current account of BOP account .What does a deficit in current account indicates ?

(Q14) State the nature of transactions that are recorded in current account of the B.O.P ?

(3M) (S.P)

(Q15) Distinguish between current account and capital account of balance of payment account. Is import of machinery recorded in current account or capital account ?

(4M) (S.P)

(Q16) Distinguish between balance of trade and balance on current account.

(3M) (‘08)

(Q17) Distinguish between balance on trade account and balance on current account.

(4M) (‘09)

SAMPLE PAPER + C.B.S.E 2010

(Q1) Distinguish between autonomous and accommodating transactions of balance of payments account.

(3M)

(Q2) Distinguish between the current account and capital account of balance of payments
account. Is import of machinery recorded in current account or capital account ? Give reasons
for your answer.

(3M)

(Q3) What is meant by balance of trade?

(1M)

(Q4) Explain the meaning of deficit in Balance of Payments.

(4M)

C.B.S.E PAPER 2011 & 2012

(Q1) Which transactions determine the balance of trade ? When is balance of trade in surplus?

(3M)

(Q2) List the transactions of Current Account of the Balance of Payments Account.

(3M)

(Q3) Distinguish between balance of trade and balance on current account of balance of payments.

C. B. S. E PAPER 2014

(Q1) Distinguish between ‘autonomous’ and ‘accommodating’ BOP transactions.

SAMPLE PAPER

(Q2) What does the Balance of Payments Account record ? Distinguish between the “ balance on current account” and the “balance of trade” in this account.

(3 marks)

(Q3) Explain the difference between ‘autonomous investment’ and ‘induced investment’.

(3 marks)

(Q4) State any four items of current account of BOP account. ‘ or State any four components of capital account of BOP account.

(4 marks)

CBSE 2015

(Q1) Where is ‘borrowings from abroad’ recorded in the Balance of Payments Accounts ? Give
reasons.

(3 M)

Ans :: ‘Borrowings from abroad’ is recorded in the ‘capital account’ of BOP account because it increases international liability of the country.

(11/2M)

It is recorded on the credits side because it brings in foreign exchange into the country.

(11/2M)

(Q2) Where will sale of machinery to abroad be recorded in BOP accounts ? Give reasons ?

Ans :: Current Account , Export of Good , Credit side

(Q3) Giving reasons explain where charity to foreign countries is recorded in the BOP ?

(Q4) State true or false with reason
(a) Profit received from investments abroad is recorded Capital Account
(b) Import of machines is recorded in current account

Ans :: F , T

(Q5) What is meant by ‘official reserve transactions’? Discuss their importance in Balance of Payments.

Ans :: Transactions by a central bank that cause changes in its official reserves. These are usually purchases or sales of its own currency in the exchange market in exchange for foreign currencies or other foreign currency denominated assets. They may be Autonomous Receipts and Autonomous Payments, disequilibrium between which may occur as deficit/surplus in balance of payment.

(Q6) What is meant by “balance of payment” account? Distinguish between the “balance on current account” and “balance of trade” account. In which account would remittances from family members from abroad be accounted?

(4M)

Ans :: Remittances from family members from abroad is accounted for under unilateral transfers of the current account.

CBSE 2016

(Q1) Foreign exchange transactions which are independent of other transactions in the Balance of Payments Account are called : (Choose the correct alternative)

(1M)

(a) Current transactions (b) Capital transactions
(c) Autonomous transactions (d) Accommodating transactions

(Q2) Foreign exchange transactions dependent of other transactions in the Balance of
Payments Account are called : (Choose the correct alternative)

(1M)

(a) Current transactions (b) Capital transactions
(c) Autonomous transactions (d) Accommodating transactions

(Q3) BOP “deficit” is the excess of
(a) Current account payments over current account receipts
(b) Capital account payments over capital account receipts
(c) Autonomous payments over autonomous receipts
(d) Accommodating payments over accommodating receipts

(Q4) Indian investors lend abroad. Answer the following questions :

(6M)

(a) In which sub-account and on which side of the Balance of Payments Account such
lending is recorded ? Give reasons.
(b) Explain the impact of this lending on market exchange rate.

(Q5) (a) In which sub-account and on which side of balance of payments account will foreign
investments in India be recorded ? Give reasons.

(3+3M)

(b) What will be the effect of foreign investments in India on exchange rate ? Explain.
 

EXTRA QUESTION’S

(Q1) What are the categories of classifying transaction ?

(Q2) Explain three main components of Balance of Payment accounts ?

(Q3) What is meant by unrequitted receipts ?

(Q4) How is unfavourable Balance of trade Offset ?

(Q5) BOT may be favourable or unfavourable or in equilibrium but BOP always balances in accounting sense ? Explain

(Q6) Balance Of payment always balances .Does it mean a situation of zero net obligation for a  country?

(Q7) What are official reserve transaction ? Explain their importance in the BOP ?

(Q8) Explain the distinction between autonomous and accommodating transactions in balance of payments. Also explain the concept of balance of payments ‘deficit’ in this context.

(Q9) Given

 

(Q10) “Deficit in current account of BOP necessarily always indicate a weak economy “ .Statement is true or false . Give reason for your answer ?

(Q11) Should a current deficit be a cause for alarm ? Explain.

Ans. Since deficit in current account is met by the surplus of capital account, it is not taken as a cause for alarm.

(Q12) Do you think that a surplus in capital account BOP reflects prosperity of the nation ?

(Q13 ) How does the following would affect india’s CAD ( current account deficit )
(a) “ Slump in oil price”
(b) “ India rupees has been depreciating in the recent times”
(c) “ Cancellation of coal block by Supreme court”
 

(Q14) If India’s export of goods is Rs. 200 crore and import of goods is Rs. 150 crore, then whatis difference between these two terms called and how it is related with Balance of Payments ?

Ans. Balance of Trade (BOT) is a part of Balance of Payment (BOP). Balance of
Payments is a wider concept.

(Q15) If the country’s current account of BOP shows a deficit of Rs. 200 crore and it is going to
increase, then how can it be financed ?

Ans. If there is current account deficit, then it can be restored or financed by a surplus of BOP on capital account by taking a loan or making a withdrawal from foreign exchange revenue, etc.

(Q16) India’s Balance of Trade (BOT) is unbalanced, i.e. in disequilibrium, mainly deficit. Then
suggest the measures to reduce disequilibrium, i.e. deficit.

Ans. If BOT is in disequilibrium, then we will suggest the following measures to rectify the disequilibrium -
(a) Export promotion (b) Import restriction (c) Import substitution.

(Q 17 ) In case of inflation, should we make more export or more import. Which one is better ?

Ans. In case of inflation, more import is better than export of goods. During
inflation goods are not available in a country to fulfill the wants of people. Thus, it is better to
purchase them from abroad. However, less export is better as goods which are in surplus
can be exported.