Balance of Payment Class 12 MCQ ISC covers certain important topics, which are covered under syllabus for ISCE Class 12 and are coming in Term II examination for the academic year 2022-23. Balance of Payment Class 12 MCQ Test contains 55 questions. MCQ on Economics Class 12 ISC have been made for Class 12 students to help check the concept you have learnt from detailed classroom sessions and application of your knowledge.
Balance of Payment Class 12 MCQ ISC
Meaning of BOP
1._______ is known as the record of economic transactions among different countries.
(a) Systematic record
(b) Balance of payment
(c) Balance of trade
(d) Balance of receipts
Answer
Answer: (b) Balance of payment
2. The main objective of keeping the balance of the payment account is;
(a) To know the international position of the trade
(b) To know the capital flows of a country
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (c) Both (a)&(b)
3. Which of the following statements out the balance of the payment account is true?
(a) A systematic record of economic transactions
(b) Between Domestic and foreign residents.
(c) Record of one year
(d) All of the above
Answer
Answer: (d) All of the above
4. Economic transactions are the flow of economic goods, services and assets. (True/False)
Answer
Answer: True
5. Balance of payment is a ____ concept.
(a) Flow
(b) Stock
(c) Supply
(d) None of the above
Answer
Answer: (a) Flow
Balance of Payment Class 12 MCQ ISC
Component of BOP
6. Balance of the payment account of a country has _____ sides.
(a) 3
(b) 2
(c) 4
(d) 1
Answer
Answer: (b) 2
7. Credit side of BOP contains
(a) Receipts
(b) Debits
(c) Payments
(d) All of the above
Answer
Answer: (a) Receipts
8. Debit side of BOP contains
(a) Receipts
(b) Debits
(c) Payments
(d) All of the above
Answer
Answer: (c) Payments
9. Payment made by countries residents to foreigners is called _______
(a) Credit
(b) Debit
(c) Payment
(d) Receipts
Answer
Answer: (b) Debit
10. Payment received from the foreigners is called______.
(a) Credit
(b) Debit
(c) Payment
(d) Receipts
Answer
Answer: (a) Credit
11. ______ records all international economic transactions relating to the export and import of goods and services.
(a) Current account BOP
(b) Balance of payment account
(c) Capital account BOP
(d) None of the above
Answer
Answer: (a) Current account BOP
12. Current account transactions are of a stock nature. (True/False)
Answer
Answer: False
13. ________ records all international economic transactions relating to change in assets.
(a) Current account BOP
(b) Balance of payment account
(c) Capital account BOP
(d) None of the above
Answer
Answer: (c) Capital account BOP
14. The assets in the capital account are;
(a) Financial
(b) Physical
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (c) Both (a)&(b)
15. Capital account BOP records
(a) Short term Capital transactions
(b) Capital transfers
(c) Long term capital transactions
(d) Both (a)&(c)
Answer
Answer: (d) Both (a)&(c)
16. Capital transactions are stock in nature. (True/False)
Answer
Answer: True
17. Credit shows _____ and debit shows _____.
(a) Receivable and payable
(b) Payable and receivable
(c) Payable and nothing
(d) Nothing and payable
Answer
Answer: (a) Receivable and payable
18. Visible trade include;
(a) Physical goods
(b) Tangible items
(c) Iron and cars
(d) All of the above
Answer
Answer: (d) All of the above
19. Which of the following are invisible trade;
(a) Income
(b) Services
(c) Unilateral transactions
(d) All of the above
Answer
Answer: (b) Services
20. _______ are the receipts and payments which take place without any service in return in the current period.
(a) Tangible transactions
(b) Physical transactions
(c) Unilateral transactions
(d) None of the above
Answer
Answer: (c) Unilateral transactions
21. Which of the following are examples of unilateral transactions
(a) Gifts and donations
(b) Import of toys
(c) Export of tea
(d) Purchasing financial assets
Answer
Answer: (a) Gifts and donations
22. Incomes is classified into;
(a) Investment Income
(b) Compensation of employees
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (c) Both (a)&(b)
23. Investment income comprises of;
(a) Interest
(b) Dividend
(c) Profit
(d) All of the above
Answer
Answer: (d) All of the above
24. Capital account transactions show a change in the stock magnitude. (True/False)
Answer
Answer: True
25. Capital movements are classified into;
(a) Foreign direct investment
(b) Portfolio investment
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (c) Both (a)&(b)
26. _______ refers to investment undertaken in the firms belonging to other countries by acquiring control over them
(a) Foreign direct investment
(b) Portfolio investment
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (a) Foreign direct investment
27. _______ is the investment under which countries and residents of a country purchase shares of foreign companies or buy bonds
(a) FDI
(b) Portfolio investment
(c) Direct investment
(d) Indirect investment
Answer
Answer: (b) Portfolio investment
28. ______ has a direct effect on the level of income in a country.
(a) Capital account
(b) Current account
(c) Portfolio investment
(d) FDI
Answer
Answer: (b) Current account
Balance of Payment Class 12 MCQ ISC
BOP disequilibrium
29. Disequilibrium in the BOP occurs as
(a) Surplus
(b) Deficit
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (c) Both (a)&(b)
30. Which of the following causes adverse BOP.
(a) Fall in foreign demands
(b) Inflationary pressure in a country
(c) Appreciation in the exchange rate
(d) All of the above
Answer
Answer: (d) All of the above
31. Which of the following are the measures to correct disequilibrium in BOP
(a) Depreciation
(b) Devaluation
(c) Import control
(d) All of the above
Answer
Answer: (d) All of the above
32. Depreciation of a Country’s currency wipes out deficit BOP. (True/False)
Answer
Answer: True
33. ______ is the rise in the price of foreign currency.
(a) Devaluation
(b) Depreciation
(c) Appreciation
(d) Revaluation
Answer
Answer: (b) Depreciation
34. Depreciation makes imports cheaper. (True/False)
Answer
Answer: False
35. Depreciation occurs under;
(a) Fixed exchange rate system
(b) Flexible exchange rate system
(c) Mixed exchange rate system
(d) None of the above
Answer
Answer: (b) Flexible exchange rate system
36. Quota is a quantitative restriction. (True/False)
Answer
Answer: True
Balance of Payment Class 12 MCQ ISC
Foreign exchange rate
37. Foreign currency and claim in the form of bank deposits and cheques payable in those currencies is called;
(a) Currency
(b) Foreign exchange
(c) Foreign Capital
(d) Foreign investment
Answer
Answer: (b) Foreign exchange
38. _____ is the market where foreign exchange is traded
(a) Foreign exchange market
(b) International market
(c) Currency market
(d) Exchange market
Answer
Answer: (a) Foreign exchange market
39. ______ refers to the rate at which currencies of different countries are traded
(a) Currency rate
(b) International currency rate
(c) Foreign exchange rate
(d) None of the above
Answer
Answer: (c) Foreign exchange rate
40. In the fixed exchange rate system, foreign exchange is officially declared by the government. (True/false)
Answer
Answer: False
41. Under ______ exchange rate is left free to be determined in the foreign exchange market by the forces of demand and supply.
(a) Flexible exchange rate
(b) Floating exchange rate
(c) Both (a)&(b)
(d) Fixed exchange rate
Answer
Answer: (c) Both (a)&(b)
42. There are _____ types of flexible exchange rate systems.
(a) 3
(b) 2
(c) 1
(d) 4
Answer
Answer: (b) 2
43. Under______, the central bank stands aside and allows the exchange rate to be freely determined in the foreign exchange market.
(a) Flexible exchange rate
( b) Floating exchange rate
(c) Clean floating
(d) Dirty floating
Answer
Answer: (c) Clean floating
44. Under ______ the central bank intervenes to buy and sell foreign currencies in an attempt to influence the exchange rate.
(a) Flexible exchange rate
(b) Floating exchange rate
(c) Clean floating
(d) Dirty floating
Answer
Answer: (d) Dirty floating
45. _______ is the fall in the free market value of a domestic currency relative to the currency of other countries in the foreign exchange market.
(a) Depreciation
(b) Appreciation
(c) Devaluation
(d) Revaluation
Answer
Answer: (a) Depreciation
46. _______ is the rise in the free market value of a domestic currency relative to the currency of other countries in the foreign exchange market.
(a) Depreciation
(b) Appreciation
(c) Devaluation
(d) Revaluation
Answer
Answer: (b) Appreciation
47. _____ is the deliberate action undertaken by the Central bank to decrease the value of a domestic currency relative to the currencies of other countries.
(a) Depreciation
(b) Appreciation
(c) Devaluation
(d) Revaluation
Answer
Answer: (c) Devaluation
48. _____ is the deliberate action undertaken by the Central bank to raise the value of a domestic currency relative to the currencies of other countries.
(a) Depreciation
(b) Appreciation
(c) Devaluation
(d) Revaluation
Answer
Answer: (d) Revaluation
49. Devaluation occurs under;
(a) Flexible exchange rate
(b) Fixed exchange rate
(c) Clean floating
(d) Dirty floating
Answer
Answer: (b) Fixed exchange rate
50. The Demand for foreign exchange varies directly with the exchange rate. (True/False)
Answer
Answer: False
51. Demand for foreign exchange arises due to;
(a) Exports
(b) Imports
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (b) Imports
52. Supply of foreign exchange arises due to;
(a) Exports
(b) Imports
(c) Both (a)&(b)
(d) None of the above
Answer
Answer: (a) Exports
53. The supply of foreign exchange varies directly with the exchange rate. (True/False)
Answer
Answer: True
54. Deficit in BOP implies;
(a) Exports
(b) Imports
(c) Excess demand
(d) Excess supply
Answer
Answer: (c) Excess demand
55. Which of the following will increase the supply of foreign exchange?
(a) Increase in export
(b) Increased foreign investment
(c) Availability of loans from abroad
(d) All of the above
Answer
Answer: (d) All of the above
Economics Class 12 ISC MCQs – Term 2
- Theory of Income and Employment Class 12 MCQ
- Money : Meaning and Functions
- Banks : Commercial Bank and Central bank
- Balance of Payments and Exchange Rate
- Government Budget
- MCQ on Fiscal Policy Class 12 Economics
- National Income and Circular flow of Income
- National Income Aggregates Class 12 MCQ
- Methods of Measuring National Income Class 12 MCQ