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Test Paper - M.COM - Sem III
Test Paper - M.COM - Sem III
Ans :
Economic conditions
Exchange value of currency
International trade
Foreign exchange position
Economic policies of the government
Debits (-)
(Payments)
1. Current Account
Exports
(a) Goods
(b) Services
(c) Transfer payments
Imports
(a) Goods
(b) Services
(c) Transfer payments
2. Capital Account
(a) Borrowings from Foreign countries
(a) Lending to Foreign
countries
(b) Direct Investments by Foreign countries
(b)
Direct
Investment
Foreign countries
3. Official settlement Account
(a) Increase in Foreign official Holdings
(a) Increase in Official
reserve of Gold
Foreign currencies
4) Why and how is the BOP always balanced in an accounting sense and it may
be not balanced in an economic sense
Ans: In an accounting sense the BOP is always balanced because of the doubleentry system of accounting. While BOP is accounting sense is always
balanced there might be disequilibrium in an economic sense. As per the
economic sense there can be surplus or deficit in the BOP. The difference
in current account of BOP is restored through equivalent difference in
capital account.
5) Any 3 factors which effects the components of BOP (in Export/Import) in
current account and 2 factors which effects the components of BOP in capital
account
Ans:Factors effecting current account are
Prevailing exchange rate
Inflation rate
World process of commodity
Income of foreigners
Trade Barriers
Factors effecting the Capital account
Income on Investment
Transfer payments
Capital account transaction Return, Risk, Diversification, Movement in
exchange rates
6) What is the foreign exchange market and key features of the foreign
exchange market
Ans :