Nahata Professional Academy

Q1. Choose the Correct Answer

1. A company located in India recives a loan from a company located abroad. How is this transaction
is recorded in India's balance of payment account?

(i) Credit side of current account

(ii) Debat side of current account
(iii) Credit side of capital account
(iv) Debit side of capital account

2. A Indian company located in India invests acompany located abroad. This transaction is entered
in India's balance of payment account on

(i) Credit side of current account

(ii) Debat side of current account
(iii) Credit side of capital account
(iv) Debit side of capital account

3. Balance of Payment ‘deficit’ is the excess of:

(i) Current account payment over Current account receipts

(ii) Capital account payment over Capital account receipts
(iii) Autonomous payment over Autonomous receipts
(iv) Accommodating payment over Accommodating receipts

4. Foreign Exchange Tramactions which are independent of other transactions in the Balance of
Payments Account are called:

(i) Current transactions

(ii) Capital tramactions
(iii) Autonomous transactions
(iv) Accommodating transactions

5. Foreign Exchange Transactions dependent on other Foreign Exchange Transactions are called:

(i) Current account transactions

(ii) Capital account transactions
(iii) Autonomous transactions
(iv) Accommodating transactions
Q2. Fill in the Blanks

1. _________________ is the record of inflow and outflow of foreign exchange.

2. When foreign exchange receipts in the current account fall short of foreign exchange payments, it
is called ________________.
3. _________________ refers to situation of excess of imports of goods over exports of goods.
4. __________________ of BOP is that account which records exports and imports of goods.

Q3. Match the following

Column A Column B
(a) Import of shipping service (1) Accommadating Items

(b) Export of Machinery (2) Invisible Items

(c) Borrowings from IMF (3) Visible Items

(d) Foreign aid (4) Unilateral Transfer

Q4. State wheather True Or False

(i) Import of machinery is reflected in the current account of balance of payments.

(ii) Current account of balance of payments is that account which records all transactions between
residents of a country and rest of the world which U cause a change in ownership of assets.

(iii) Accommodating items cause movements of goods goods and services across the borders.

(iv) Current account is a part of balance of trade.

Q5. What does Balance of Payments Account show? Name the two parts of Balance of Payments

Q6. List the transactions of Current Account of the Balance of Payments Account.

OR

State the components of Current Account of Balance of Payments

OR

What are the components of the Current Account of the Balance of Payment Account ?
Q7. List the items included as invisibles in the Balance of Payments Account

Q8. State the components of Capital Account of Balance of Payments

OR

Name the broad categories of transactions recorded in the 'Capital Account' of the Balance of
Payments Accounts

Q9. Distinguish between Current and Capital Account of the balance of payment account on the basis of
its components.

Q10. What is meant by ‘offical reserve transaction’ ? Discuss their important in Balance of Payment.

Q11. Where will sale of machinery to abroad be recorded in the balance of payment Account ? Give
reasons.

Q12. Explain the meaning of Balance of Payment Deficit.

Q13. Which transaction determine the Balance of Trade? When is balance of Trade in Surplus ?

Q14. Distinguish between ‘Autonomous’ and ‘Accommadation’ Balance of Payment Transaction

Q15. Distinguish between Balance of trade and balance of current account of the balance of payments
account.

Q16. Where is ‘borrowing from abroad’ recorded in the balance of payment account ? Give reasons.

Q17. “Rise in reserves of India’s foreign exchange is a sign of our rising exports”. Justify

Q18. How does ‘exports/imports’ components affect the circular flow of income in a country

Q19. Define balance of payment. Discuss briefly the components of current accounts.

Q20. State the effect of the following on the balance of payments situations

(i) Increase in import duty of gold.

(ii) Rise in the price of foreign currency

Q21. What will be the effect of the following on the balance of payment ?

(i) ‘Make in India’ programme

(ii) Import of pulses
Q22. Are the following entre (i) on the credit side or debit side and (ii) In the current Account or capital
account in the balance of Payment account ? You mustgive resone for your answer.

(i) Investment from Abroad

(ii) Transfer of funds to relatives Abroad.

Q23. In the context of balance of payment account weather the following statement are true or false. Give
reasones for your answer.

(i) Profits recived from investment abroad is recorded in capital account

(ii) Import of machine is recorded in current Accounts

Q24. State whether the following statements are true or false. Give reasons for your answer

(i) Difference between value of exports and imports of goods and services is called Trade
Balance.
(ii) External assistance is not recorded in Balance of Payments Account

Q25. Giving reasons state whether the following statements are true or false:

(i) Excess of foreign exchange receipts over foreign exchange payments on account of
accommodating transactions equals deficit in Balance of Payments.
(ii) Export and Import of machines are recorded in Capital Account of the Balance of Payments
Account.

Q26. Giving reasons state whether the following statements are true or false:

(i) Current Account of Balance of Payments account records only exports and imports of good
and service
(ii) Foreign investments are recorded in capital account of balance of payment

Q27. Distinguish between Autonomous and Accommodating Transactions of Balance Payments Account.
Explain the significant this distinction.

OR

Distinguish between Autonomous transaction and the Accommodating Transactions in Balance of

Payments. What is the significan this distinction?

Q28. Distinguish between trade account and current account of balance of payment account