This page provides complete NCERT Class 12 Introductory Macroeconomics Chapter 6 questions, including MCQs, one-word and descriptive questions. All questions are extracted line-by-line from NCERT for full syllabus coverage and exam preparation.
The Balance of Payments (BoP) is presented as the record of all international transactions, divided into the Current Account (goods, services, transfers) and the Capital Account (asset transactions). Key distinctions are drawn between trade balance and invisibles, autonomous vs accommodating transactions, and the relationship between current account deficit and capital account surplus.
The second half of the chapter focuses on the foreign exchange market and exchange rate determination. It explains demand and supply of foreign exchange, the flexible exchange rate system (where rates are market-determined), depreciation/appreciation, and factors like speculation, interest rate differentials, and income changes that affect exchange rates.
The Purchasing Power Parity (PPP) theory is introduced for long-run predictions. Fixed exchange rates (devaluation/revaluation) and managed floating (dirty floating) are contrasted. The chapter concludes with an analytical section on equilibrium income in an open economy, showing that the autonomous expenditure multiplier is smaller than in a closed economy due to the marginal propensity to import (m) acting as an additional leakage. Numerical examples and exercises reinforce these concepts.
Get MCQs, One-Liners, Descriptive and Assertion & Reason based questions and answers mapped to exact page numbers. Designed for effortless memorization for Boards & Civil Services.
Get MCQs, One-Liners, Descriptive and Assertion & Reason based questions and answers mapped to exact page numbers. Designed for effortless memorization for Boards & Civil Services.
An open economy is defined as one that trades with other nations in:
Movement of goods has traditionally been seen as a substitute for:
Which of the following is recorded in the Current Account?
Transfer payments in the Current Account include:
Balance of Trade (BOT) is the difference between:
A surplus current account means that the nation is:
Which of the following is NOT a part of the Capital Account?
Purchase of an asset by an Indian abroad is entered in the Capital Account as:
In balance of payments equilibrium without reserve movements:
Official reserve sale occurs when:
Accommodating transactions in BoP are also called:
The price of one currency in terms of another currency is called the:
Under a flexible exchange rate system, the exchange rate is determined by:
When the price of foreign currency in terms of domestic currency rises, domestic currency is said to:
According to the Purchasing Power Parity (PPP) theory, exchange rates adjust to reflect differences in:
In a fixed exchange rate system, government action that increases the exchange rate (makes domestic currency cheaper) is called:
Managed floating exchange rate system is also known as:
The open economy autonomous expenditure multiplier is given by:
If c = 0.8 and m = 0.3, the open economy multiplier is:
An autonomous increase in imports (ÎMĖ) causes equilibrium income to:
Get MCQs, One-Liners, Descriptive and Assertion & Reason based questions and answers mapped to exact page numbers. Designed for effortless memorization for Boards & Civil Services.
Name the account that records trade in goods, services, and transfer payments. Page 86
Name the account that records international transactions of assets. Page 88
What is the difference between exports and imports of goods called? Page 87
What is the term for receipts that residents get for free without providing goods/services in return? Page 86
What is the term for international transactions made for profit, independent of BoP status? Page 89
What are the transactions that bridge the gap in BoP called? Page 89
The market in which national currencies are traded for one another is called? Page 91
When the domestic currency becomes cheaper in terms of foreign currency in a flexible system, it is called? Page 92
When the domestic currency becomes costlier in terms of foreign currency in a flexible system, it is called? Page 92-93
Government action that makes domestic currency cheaper in a fixed exchange rate system is called? Page 94
Government action that makes domestic currency costlier in a fixed exchange rate system is called? Page 94
The theory that exchange rates adjust to reflect price level differences between countries is called? Page 93-94
The fraction of an extra rupee of income spent on imports is called? Page 98
What is the term for central bank intervention to moderate exchange rate movements without full fixing? Page 95
A situation where exports exceed imports is called? Page 87
A situation where imports exceed exports is called? Page 87
Get MCQs, One-Liners, Descriptive and Assertion & Reason based questions and answers mapped to exact page numbers. Designed for effortless memorization for Boards & Civil Services.