MCQ Questions Chapter 12 Open Economy Macroeconomics Class 12 Economics

Please refer to MCQ Questions Chapter 12 Open Economy Macroeconomics Class 12 Economics with answers provided below. These multiple-choice questions have been developed based on the latest NCERT book for class 12 Economics issued for the current academic year. We have provided MCQ Questions for Class 12 Economics for all chapters on our website. Students should learn the objective based questions for Chapter 12 Open Economy Macroeconomics in Class 12 Economics provided below to get more marks in exams.

Chapter 12 Open Economy Macroeconomics MCQ Questions

Please refer to the following Chapter 12 Open Economy Macroeconomics MCQ Questions Class 12 Economics with solutions for all important topics in the chapter.

MCQ Questions Answers for Chapter 12 Open Economy Macroeconomics Class 12 Economics

Question. Foreign exchange transactions dependent on other foreign exchange transactions are called:
a) Current account transactions
b) Capital account transactions
c) Autonomous transactions
d) Accommodating transactions 

Question .The operation of future delivery in the foreign exchange market is known as __
a) Spot market
b) Current market
c) Forward market
d) Domestic market 

Question. When the import and export of visible items are equal, the situation is known as
a) Balance of Trade
b) Balance of Payment
c) Trade Surplus
d) Trade Deficit 

 Question.Which account is included in the composition of Balance of Payments ?
a) Current Account
b) Capital Account
c) Both a) and b)
d) None of the above 

Question. The operation of daily nature in the foreign exchange market is known as
a) Spot market
b) Forward market
c) Domestic market
d) International market 

Question. Which one is the visible item of Balance of Payments?
a) Machine
b) Cloth
c) Cement
d) All of these 

Question. Which among the following is a source of supply of foreign exchange?
a) Donations given
b) Imports
c) Exports
d) Gifts 

Question. When there is a favourable balance of trade?
a) X > M
b) X = M
c) X < M
d) None of these 

Question .Which one is the king of the exchange rate?
a) Fixed Exchange Rate
b) Flexible Exchange Rate
c) Both a) and b)
d) None of the above  

Question .The records of exports and imports in goods and services and transfer payments is known as
a) Current account
b) Budget surplus
c) Economic leakage
d) degree of openness 

Question. Which one is a merit of the fixed exchange rate?
a) Promotes Foreign Trade
b) Induces Foreign Capital
c) Increases Capital Formation
d) All the above 

Question. Hybrid in management of fixed and flexible exchange rate is known as ________
a) Managed to float
b) Crawling Peg
c) Wider Bands
d) None of these 

Question .Balance of Trade means :
a) Capital Transaction
b) Import and export of goods
c) Total debit and credit
d) All the above   

Question. If Rs 150 are required to buy $ 2, instead of Rs100 earlier, then:
a) Domestic currency has depreciated;
b) Domestic currency has appreciated;
c) Rupee value of import bill will increase;
d) Both a) and c) d) 

Question.Which one is a kind of fixed exchange rate?
a) Gold Standard System of Exchange Rate
b) Bretton Woods System of Exchange Rate
c) Both a) and b)
d) None of the above 

Question. Types of Foreign Exchange Market are:
a) Spot market
b) Forward market
c) Both a) and b)
d) None of these   

Question. Which one is a demerit of the flexible exchange rate?
a) Bad Results of Low Rate
b) Uncertainty
c) Instability in Foreign Exchange
d) All the above 

Question. Which of the following is a merit of the fixed exchange rate?
a) Ensures the supply of the fixed exchange rate
b) Ensures the demand for the fixed exchange rate
c) Ensures the stability for the fixed exchange rate
d) None

Question. Which one is the item of Capital Account?
a) Government Transaction
b) Priva Transactions
c) Foreign Direct Investment
d) All the above   

Question .The foreign exchange rate is determined by:
a) Government
b) Bargaining
c) World Bank
d) Demand and Supply forces   

Question. Increase in the value of foreign commodities is known as _________
a) Revaluation
b) Devaluation
c) Inflation
d) None of these 

Question. The exchange rate at which demand for foreign currency becomes equal to its supply,is called:
a) Equal rate of exchange;
b) Unequal rate of exchange;
c) Equilibrium rate;
d) All of these 

Question. Measures to improve adverse balance of payment includes :
a) Currency devaluation
b) Import substitution
c) Exchange control
d) All of the above. 

Question.The Gold Standard was prevalent in the world from:
a) 15th century to 18th century
b) 9th century to 18th century
c) From 1870 till First World War
d) From 1670 till First World War 

Question. Assertion a) – Import of goods and services reflects demand of foreign currency.
Reason (R) – Import of goods and services show inflow of foreign currency.
a) Both A and R are true. R is the correct explanation of A.
b) Both A and R are true, but R is not the correct explanation of A.
c) A is correct, but R is incorrect.
d) A is incorrect, but R is correct.

Question. Which of the following is a major participant in foreign exchange market?   
a) Commercial Banks
b) Foreign Exchange brokers and other authorized dealers
c) Monetary authorities
d) All of the above

Question. Assertion A) – Balance of Accounts is always balanced. 
Reason (R) – Autonomous Transactions restore balance in Balance of Payments Account.
a) Both A and R are true. R is the correct explanation of A.
b) Both A and R are true, but R is not the correct explanation of A.
c) A is correct, but R is incorrect.
d) A is incorrect, but R is correct.

Question. Which of the following is a source of supply of Foreign Exchange? 
a) Current transfers to abroad.
b) Speculation
c) Portfolio Investment
d) None of these

Question. Official Reserve transactions are relevant under fixed exchange system. 
a) True
b) False

Question. ____________ transactions refer to those international economic transactions which take place due to some economic motive. 
a) Autonomous
b) Accommodating
c) Both a) and b)
d) None of these

Question. Why does the central bank need to intervene in a managed floating system? 
a) To reduce fluctuations in the exchange rate.
b) To maintain the exchange rate at the specified level
c) To cover the surplus and deficits in BOP.
d) None of the above

Question. Decrease in demand for foreign currency leads to currency depreciation. 
a) True
b) False

Question. Official Reserve Transactions are relevant under: 
a) Floating exchange rate system
b) Fixed exchange rate system
c) Managed exchange rate system
d) Both b) and c)

Question. Balance of payments 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.

Question. An Indian company located in India invests in a company located abroad. This transaction is entered in India’s balance of payments account on: 
a) Credit side of current account
b) Debit side of current account
c) Credit side of capital account
d) Debit side of capital account

Question. Which of the following items is not included in the current account of Balance of Payments of a country? 
a) Interest, profits and dividends on abroad.
b) Income from software services.
c) Remittances from abroad.
d) Foreign Direct Investment

Question. Unilateral transfers are a part of: 
a) Capital Account
b) Current Account
c) Balance of Trade Account
d) Balance of Payment Account and Current Account

Question. Balance of Trade refers to balance of exports and imports of: 
a) Visible items
b) Invisible items
c) Both
d) None

Question. ____________ transactions of BOP are carried by the Central Bank to bring equilibrium. 
a) Autonomous
b) Accommodating
c) Both a) and b)
d) None of the above

Question. Assertion A) – Fixed Exchange Rate System is also known as Floating Exchange Rate System. 
Reason (R) – In fixed exchange rate system, currency of home country is tied with some external standard like gold etc.
a) Both A and R are true. R is the correct explanation of A.
b) Both A and R are true, but R is not the correct explanation of A.
c) A is correct, but R is incorrect.
d) A is incorrect, but R is correct.

Question. An Indian Real Estate Company receives rent from Google in New York. This transaction would be recorded on ______ side of ______ account. 
a) Credit, current
b) Credit, capital
c) Debit, capital
d) Debit, current

Question. A country’s balance of trade is Rs. 100 crores and value of export goods is Rs.175 crores. Find out value of import of goods. 
a) Rs.100 crores
b) Rs.175 crores
c) Rs.75 crores
d) Rs.275 crores

Question. Under the floating exchange rate system, when some exchange rate change makes domestic currency (Rupee cheaper), it is called __________ of rupee.
a) Depreciation
b) Devaluation
c) Appreciation
d) Revaluation

Question. Inflow of Foreign Investment is recorded on which side and account of BOP? 
a) Credit, current
b) Credit, capital
c) Debit, capital
d) Debit, current

Question .Other things remaining unchanged, when in a country the price of foreign currency rises, national income is:
a) Likely to rise
b) Likely to fall
c) Likely to rise and fall both
d) Not affected Answer:

Question .The forms of foreign exchange market is/are :
a) Spot market
b) Forward market
c) Both a) and b)
d) None of these 

Question.Which one is a merit of fixed exchange rate ?
a) Promotes Foreign Trade
b) Induces Foreign Capital
c) Increases Capital Formation
d) All the above 

Question.Structure of balance of payment includes which account:
a) Current account
b) Capital account
c) Both a) and b)
d) None of these. 

Question. Foreign exchange is determined by:
a) Demand for foreign currency
b) Supply of foreign currency
c) Demand and supply in the foreign exchange market
d) None of the above 

We hope you liked the above provided MCQ Questions Chapter 12 Open Economy Macroeconomics Class 12 Economics with solutions. If you have any questions please ask us in the comments box below.