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B Com Exam  >  B Com Test  >  Macro Economics  >  Test: Open Economy - B Com MCQ

Open Economy - Free MCQ Practice Test with solutions, B Com Macro Economics


MCQ Practice Test & Solutions: Test: Open Economy (10 Questions)

You can prepare effectively for B Com Macro Economics with this dedicated MCQ Practice Test (available with solutions) on the important topic of "Test: Open Economy". These 10 questions have been designed by the experts with the latest curriculum of B Com 2026, to help you master the concept.

Test Highlights:

  • - Format: Multiple Choice Questions (MCQ)
  • - Duration: 10 minutes
  • - Number of Questions: 10

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Test: Open Economy - Question 1
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What must balance each other in an economy for it to be in equilibrium?

Detailed Solution: Question 1

For an economy to be in equilibrium, net exports (NX) and net capital outflow (NCO) must balance each other. In other words, NCO must equal NX, ensuring that the flow of goods and capital is balanced.

Test: Open Economy - Question 2
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What does the term "capital formation" refer to?

Detailed Solution: Question 2

Capital formation refers to the process of increasing the productive capacity of an economy by adding to the stock of capital goods, such as machinery, equipment, and infrastructure. It involves the transfer of savings from households and governments to the business sector to fuel economic expansion.

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Test: Open Economy - Question 3
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Which of the following best defines an open economy?

Detailed Solution: Question 3

An open economy is one that interacts freely with other economies around the world. It engages in the exchange of goods, services, and capital assets with other countries.

Test: Open Economy - Question 4
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Net exports (NX) refer to:

Detailed Solution: Question 4

Net exports (NX) are the value of a nation's exports minus the value of its imports. It represents the trade balance and indicates whether a country is exporting more than it's importing (trade surplus) or vice versa (trade deficit).

Test: Open Economy - Question 5
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Which of the following factors affects net capital outflow (NCO)?

Detailed Solution: Question 5

Government policies toward international trade can influence net capital outflow (NCO). For instance, policies that restrict foreign ownership of domestic assets or promote protectionism can affect the flow of capital in and out of a country.

Test: Open Economy - Question 6
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What is net capital outflow (NCO)?

Detailed Solution: Question 6

Net capital outflow (NCO) refers to the purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners. It represents the flow of financial resources between a country and the rest of the world.

Test: Open Economy - Question 7
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What is the relationship between net exports (NX) and net capital outflow (NCO)?

Detailed Solution: Question 7

Net exports (NX) and net capital outflow (NCO) are equal to each other for an economy in equilibrium. This relationship ensures that the flow of goods and capital is balanced, maintaining equilibrium.

Test: Open Economy - Question 8
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Which sector contributed the most to Gross Domestic Savings (GDS) in India by the end of 2004-05?

Detailed Solution: Question 8

By the end of 2004-05, the services sector contributed significantly to Gross Domestic Savings (GDS) in India. The services sector includes areas such as trade, hotels, restaurants, transport, communication, finance, insurance, real estate, business services, and community services.

Test: Open Economy - Question 9
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What is the relationship between investment and capital formation?

Detailed Solution: Question 9

Capital formation refers to the process of increasing the productive capacity of an economy by adding to the stock of capital goods, which includes machinery, equipment, and infrastructure. Investment is the act of adding to the capital stock, thus contributing to capital formation.

Test: Open Economy - Question 10
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Which factor affects the capacity to save in an economy?

Detailed Solution: Question 10

The capacity to save in an economy is influenced by factors such as the level of per capita income, growth of income, and income distribution. A higher per capita income generally provides individuals with more resources to save after meeting their consumption needs.

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About this B Com Practice Test

This test contains 10 MCQs on Open Economy with detailed solutions for each question. It is part of the Macro Economics course on EduRev, designed to align with the current B Com syllabus. Each solution explains not just the correct answer but also gives you an understanding of the topic — not just to attempt the question but also help you prepare for the exam with practice.

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If you found this Open Economy MCQ Test helpful, you can further enhance your B Com preparation with in-depth courses on EduRev, for all the subjects and topics available in Macro Economics course. The course offers:
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  • MCQ Test: variety of questions as per the pattern of B Com exam
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