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question_answer1)
The term foreign exchange means
A)
Exchange of goods of one nation for goods of other nation done
clear
B)
Exchange of goods of one nation for services of other nation done
clear
C)
Exchange of goods of one nation for currency of other nation done
clear
D)
Stock of foreign currency with domestic country done
clear
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question_answer2)
Choose the correct statement(s) from given below?
A)
Fixed exchange rate is determined by the government done
clear
B)
Flexible exchange rate is determined by market forces (demand and supply of foreign exchange) done
clear
C)
Both [a] and [b] done
clear
D)
None of the above done
clear
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question_answer3)
The gold standard system of exchange rate lost its importance during
A)
1900s done
clear
B)
1910s done
clear
C)
1920s done
clear
D)
None of these done
clear
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question_answer4)
Which of the following is/are advantages of fixed exchange rate?
A)
Promotes Foreign Trade done
clear
B)
Induces Foreign Capital done
clear
C)
Increases Capital Formation done
clear
D)
All of the above done
clear
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question_answer5)
Which of the following countries still follows fixed exchange rate system?
A)
China done
clear
B)
India done
clear
C)
USA done
clear
D)
None of these done
clear
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question_answer6)
Price of one currency in terms of other foreign currencies is determined by forces of demand and supply is known as
A)
Equilibrium Rate of Income done
clear
B)
Fixed exchange Rate done
clear
C)
Exchange Rate done
clear
D)
Flexible exchange Rate done
clear
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question_answer7)
The ............ expresses the ratio of exchange between the currencies of two countries.
A)
Foreign currency done
clear
B)
Price of goods done
clear
C)
Foreign exchange rate done
clear
D)
None of the above done
clear
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question_answer8)
Generally, the value of currency of a country is expressed in terms of
A)
US Dollar done
clear
B)
Pound Sterling done
clear
C)
Euro done
clear
D)
Japanese Yen done
clear
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question_answer9)
Devaluation of currency is a component of......... exchange rate system.
A)
fixed done
clear
B)
flexible done
clear
C)
managed floating done
clear
D)
Both [b] and [c] done
clear
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question_answer10)
Increase in the value of foreign commodities in term of domestic currency as planned by the government refers to
A)
Revaluation done
clear
B)
Devaluation done
clear
C)
Either [a] or [b] done
clear
D)
Can't predict the impact of the above situation done
clear
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question_answer11)
What will be the most likely impact on the national income when in a country the price of foreign currency rises, keeping other things unchanged?
A)
Likely to rise done
clear
B)
Likely to fall done
clear
C)
Likely to rise and fall both done
clear
D)
Not affected done
clear
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question_answer12)
Which of the following can be considered as disadvantages of the flexible exchange rate system?
A)
Excessive fluctuation done
clear
B)
Instability of Foreign Exchange done
clear
C)
Both [a] and [b] done
clear
D)
None of the above done
clear
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question_answer13)
Before the Bretton Woods standard system, exchange rates were pegged against......... .
A)
gold done
clear
B)
silver done
clear
C)
any precious metal done
clear
D)
Either [a] or [b] done
clear
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question_answer14)
The curve depicting the supply of foreign exchange is ............ sloped.
A)
negatively done
clear
B)
positively done
clear
C)
constantly done
clear
D)
Both [a] and [b] done
clear
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question_answer15)
Suppose the government plans to reduce the prices of US Dollar from Rs. 50 to Rs. 45. This step is known as ......... of domestic currency.
A)
revaluation done
clear
B)
devaluation done
clear
C)
depreciation done
clear
D)
appreciation done
clear
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question_answer16)
Demand for foreign exchange is directly related to the price of foreign exchange.
A)
True done
clear
B)
False done
clear
C)
Partially true done
clear
D)
Incomplete statement done
clear
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question_answer17)
The fixed exchange rate is determined by the Reserve Bank of India.
A)
True done
clear
B)
False done
clear
C)
Partially true done
clear
D)
Incomplete statement done
clear
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question_answer18)
Devaluation and depreciation of currency are one or the same thing.
A)
True done
clear
B)
False done
clear
C)
Partially true done
clear
D)
Incomplete statement done
clear
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question_answer19)
Write the correct pair.
| Column I | | Column II |
A. | Increase in demand for foreign currency, supply remaining unchanged | (i) | Depreciation of domestic currency. |
B. | Decrease in supply of foreign currency, demand remaining unchanged | (ii) | Appreciation of domestic currency. |
C. | Increase in supply of foreign currency, demand remaining unchanged | (iii) | Devaluation of domestic currency |
Codes
A)
A - (i) done
clear
B)
B - (ii) done
clear
C)
C - (iii) done
clear
D)
D - (iv) done
clear
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question_answer20)
The market where foreign currencies are traded is known as
A)
General market done
clear
B)
Financial market done
clear
C)
Money market done
clear
D)
Foreign exchange market done
clear
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question_answer21)
Increase in the value of domestic commodities in terms of foreign currency is known as
A)
Revaluation done
clear
B)
Devaluation done
clear
C)
Appreciation done
clear
D)
Either [a] or [c] done
clear
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question_answer22)
Which of the following can be accounted for the cause of devaluation of currency in a country?
A)
Increase in the domestic inflation rate done
clear
B)
Domestic real interest rates are less than foreign interest rates done
clear
C)
Much increase in the income done
clear
D)
All of the above done
clear
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question_answer23)
Relationship between demand for foreign exchange and foreign exchange rate is
A)
Inverse done
clear
B)
Direct done
clear
C)
No relationship between the two variables done
clear
D)
Either [a] and [b] done
clear
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question_answer24)
Indian government initiated many schemes to attract foreign investment, which of the following statement is correct from below
A)
It leads to rightward shift in supply curve of foreign exchange done
clear
B)
It leads to leftward shift in supply curve foreign exchange done
clear
C)
It leads to rightward shift in demand curve of foreign exchange done
clear
D)
It leads to leftward shift in demand curve of foreign exchange done
clear
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question_answer25)
A downward movement along the demand curve for foreign exchange indicates
A)
Appreciation of currency done
clear
B)
Depreciation of currency done
clear
C)
Devaluation of currency done
clear
D)
Revaluation of currency done
clear
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question_answer26)
Due to appreciation of domestic currency, supply curve of foreign exchange will
A)
Rise done
clear
B)
Fall done
clear
C)
Remain constant done
clear
D)
Either [a] or [b] done
clear
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question_answer27)
The US Dollar exchange rate for rupee is Rs. 75 now, as compared to Rs. 63 previously. This shows that the value of rupee has
A)
depreciated done
clear
B)
appreciated done
clear
C)
devalued done
clear
D)
revalued done
clear
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question_answer28)
Flexible exchange rate is determined by the supply and demand of foreign exchange in the international market.
A)
True done
clear
B)
False done
clear
C)
Partially true done
clear
D)
Incomplete statement done
clear
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question_answer29)
Currency appreciation depicts a situation when domestic currency gains its value in relation to a foreign currency.
A)
True done
clear
B)
False done
clear
C)
Partially true done
clear
D)
Incomplete statement done
clear
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question_answer30)
Appreciation of foreign currency leads to increase in exports from the domestic country.
A)
True done
clear
B)
False done
clear
C)
Partially true done
clear
D)
Incomplete statement done
clear
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question_answer31)
Under managed floating exchange rate system, central bank determines the exchange rate and excessive fluctuation is checked by the market forces.
A)
True done
clear
B)
False done
clear
C)
Partially true done
clear
D)
Incomplete statement done
clear
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question_answer32)
Write the correct pair.
| Column I | | Column II |
A. | Nominal exchange rate | (i) | It is the price of one unit of foreign currency in terms of domestic currency |
B. | Real exchange rate | (ii) | It is the exchange rate which does not account for changes in price level |
C. | Nominal effective exchange rate | (iii) | It is the ratio of foreign to domestic prices, measured in same currency |
D. | Flexible exchange rate | (iv) | It is the rate determined by the government of the country |
Codes
A)
A - (i) done
clear
B)
B - (ii) done
clear
C)
C - (iii) done
clear
D)
D - (iv) done
clear
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question_answer33)
Choose the incorrect pair from given below.
| Column I | | Column II |
A. | Export of Goods | (i) | Demand for foreign exchange rate |
B. | Import of Services | (ii) | Supply of foreign exchange |
C. | Fixed and Floating exchange rate | (iii) | Dirty Floating |
Codes
A)
(A)-(i) done
clear
B)
(B)-(ii) done
clear
C)
(C)-(iii) done
clear
D)
Both [a] and [b] done
clear
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question_answer34)
Occasional intervention by central bank to influence price of foreign exchange is known as ..........
A)
Dirty floating done
clear
B)
Hedging done
clear
C)
Appreciation done
clear
D)
Depreciation done
clear
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question_answer35)
If Rs. 75 are required to buy 1 US dollar, instead of Rs. 78 per US Dollar, this situation is indicating that
A)
Domestic currency has appreciated done
clear
B)
Domestic currency has depreciated done
clear
C)
Rupee value of import bill will increase done
clear
D)
Rupee value of export bill will decrease done
clear
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question_answer36)
Choose the correct statement from given below
A)
Appreciation of domestic currency leads to rise in exports done
clear
B)
Depreciation of domestic currency leads to rise in exports done
clear
C)
Devaluation of domestic currency leads to rise in exports done
clear
D)
Both [b] and [c] done
clear
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question_answer37)
Clean floating exchange rate is determined at a point where
A)
Demand for foreign exchange and Supply of foreign exchange are equal done
clear
B)
Demand for foreign exchange is less than Supply of foreign exchange done
clear
C)
Demand for foreign exchange is less than Supply of foreign exchange done
clear
D)
Determined by the central bank done
clear
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question_answer38)
In the diagram below, at exchange rate \[O{{P}_{1}}\], there is |
|
A)
Excess demand done
clear
B)
Excess supply done
clear
C)
Equilibrium done
clear
D)
Either [a] or [b] done
clear
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question_answer39)
It has been observed in recent times that Indian currency is depreciating against US Dollar. Which of the following reason can be accounted for the same?
A)
Rising inflation in the county done
clear
B)
Fall in stock prices done
clear
C)
Rise in global prices done
clear
D)
All of the above done
clear
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question_answer40)
The form of exchange market in which delivery of currency happens on the same day is known as
A)
Spot market done
clear
B)
Forward market done
clear
C)
Foreign exchange market done
clear
D)
None of the above done
clear
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