CUET Economics Chapter-open macroeconomics objectives

Important MCQ Questions on CUET Economics Chapter-open macroeconomics objectives with Detailed explanation

HT having an expert teacher of Economics prepared Important MCQ Questions on the CUET Economics Chapter-open macroeconomics objectives with Detailed explanations. All the Chapters in the syllabus of CUET Economics are covered with coverage of the entire syllabus. This page is prepared for Chapter-open macroeconomics objectives and covers all important topics of the competitive exam CUET for domain subject test. Check out the chapter-wise CUET Economics MCQ questions. 

MCQ Questions for CUET Economics Chapter-open macroeconomics objectives Set-1

Macroeconomic Economics - MCQ on Open Economy Macroeconomics

Class XII

Q.1.Foreign Exchange refers to

I. Internal payments

II. Direct Payments

III. International Payments

IV. Indirect payments

Answer:

III.International Payments

Explanation: Currency which is used for making international payments is called Foreign Exchange

Q.2.What is transfer function of foreign Exchange

I. Transferring goods and services between countries

II. Transferring trade between countries

III. Transferring purchasing power between countries

IV. Transferring gold between countries

Answer:

III.Transferring purchasing power between countries

Explanation: Foreign exchange means transferring money or currency between countries

Q.3.Credit channels for foreign trade refers to

I. Transfer Function

II. Credit Function

III. Hedging Function

IV. None

Answer:

II. Credit Function

Explanation: Credit function refers to providing credit channels for foreign trade

Q.4.The right term used for minimisation of risk is

I. Control

II. Hedge

III. Restrict

IV. All

Answer:

II.Hedge

Explanation: Hedging is an activity which is designed to minimize risk of loss and it is the right term to use

Q.5.Real exchange Rate is

I. Refers to relative price of foreign currency in terms of domestic currency

II. Refers to relative price of foreign goods in terms of domestic goods

III. Refers to relative price of domestic goods in terms of foreign goods

IV. None

Answer:

II.Refers to relative price of foreign goods in terms of domestic goods.

Explanation: When cost of purchasing one unit of domestic currency (say, rupees) is quoted in terms of foreign currency (say, dollar), it is called real exchange rate. Symbolically:

Real exchange rate = Nominal exchange rate x Foreign price level Domestic price level

Q.6 Foreigners invests in bonds and equity shares are classified under:

I. Demand of Foreign Exchange

II. Supply of foreign Exchange

III. Real Exchange

IV. Nominal Exchange

Answer:

I.Demand of foreign Exchange

Explanation: When foreigners invest in bonds and equity shares of the home country then it is called Demand of foreign Exchange.

Q.7.When there is direct relation between price of foreign exchange and supply of foreign exchange then supply curve become

I. Upward Sloping

II. Downward Sloping

III. Rightward sloping

IV. Leftward sloping

Answer:

I.Upward Sloping

Explanation There is direct relation between price of foreign exchange and supply of foreign exchange. That is why supply curve becomes upward sloping.

Q.8.Parity Value is

I. The value of a currency will be fixed in terms of another currency or in terms of gold

II. The value of a currency will be fixed in terms in terms of gold

III. The value of gold will be fixed in terms of another currency

IV. None

Answer:

III.The value of a currency will be fixed in terms another currency

Explanation: When the value of currency is fixed in terms of another currency or in terms of gold then it is called Parity Value

Q.9.Balance of Payment is of

I. Capital Nature

II. Revenue Nature

III. Expenditure Nature

IV. None

Answer:

I.Capital Nature

Explanation: The nature of Balance of payment is capital. When economic transactions take place between one country and rest of the world during a given period of time

Q.10.Balance of trade records

I. Goods

II. Services

III. Goods and Services

IV. Gifts

Answer:

I.Goods

Explanation: It records only merchandise (i.e. goods) transactions.

Q.11.Which is a wider concept

I. Balance of Trade

II. Balance of Payment

III. Balance of business

IV. Balance of Receipts

Answer:

II.Balance of payment

Explanation: It is a wider concept because it includes balance of trade, balance of services, balance of unrequited transfers and balance of capital transactions.

Q.12.What is a foreign exchange rate

I. Goods and services ofone country can be exchanged for currency of an other country.

II. Currency of one country can be exchanged for currency of an other country.

III. Gifts and Donations one country can be exchanged for currency of an other country.

IV. Currency of one country can be rotated in the same country

Answer:

II.Currency of one country can be exchanged for currency of an other country

Explanation: A rate at which currency of two countries can be exchanged

Q.13.Equilibrium in foreign exchange can be determined by

I. Demand and supply

II. Revenue and Expenditure

III. Foreign Exchange Rate

IV. None

Answer:

I.Demand and supply

Explanation: The Demand and Supply are the forces through which Equilibrium is determined

Q.14.BOT shows a deficit of Rs.10, 000 crores and value of imports are

Rs.5,000 crores. What is the value of exports?

I. 5000.

II. 10000

III. 2

IV. 20

Answer:

I.5000

Explanation: BOT = Value of exports – Value of imports

10,000-5,000=5,000

Q.15.Cause for disequilibrium in BOP is:

I. High domestic prices

II. New sources of supply and new substitutes

III. Political instability

IV. All

Answer:

IV.All

Explanation: When there is high domestic price, instability in political condition and new substitutes of supply are causes for disequilibrium in BOP

MCQ Questions for CUET Economics Chapter-open macroeconomics objectives Set-2

Q.16.Explain the meaning of Crawling Peg.

I. A crawling peg is a compromise between fixed and flexible exchange rates

II. Crawling peg is compromise between internal and international rate

III. A crawling peg is a compromise between constant and current exchange rates

IV. None

Answer:

I.A crawling peg is a compromise between fixed and flexible exchange rates

Explanation: According to it a country specifies a parity value for its currency and permits a small variation (such as +/- 1 %) from that parity.

Q.17.How are comparison of International Costs and prices made:

I. Internal Rate

II. International Rate

III. Foreign Exchange Rate

IV. None

Answer:

III.Foreign Exchange rate

Explanation: The rate at which currency of one country can be exchanged with other country is foreign exchange rate.

Q.18.Unilateral transfers are part of

I. Current Account

II. Capital Account

III. Trading Account

IV. None

Answer:

I.Current Account

Explanation: Unilateral Payment is a part of invisible items. The receipt which residents of country receive or payments that residents of a country make without getting anything in return is unilateral transfer which comes under Current Account.

Current account records export and import, services and unilateral payments

Q.19.Official Transaction is the part of

I. Current Account

II. Capital Account

III. Trading Account

IV. None

Answer:

II.Capital Account

Explanation: Capital account records capital transactions in foreign investment, loan, banking, capital rupee debt service.

Q.20.When there is decrease in the domestic currency price in comparison of foreign currency then it is known as

I. Currency appreciation

II. Currency Depreciation

III. Fixed Currency

IV. Currency Deterioration

Answer:

II.Currency Depreciation

Explanation: When the value of currency decrease as compared to foreign currency and it becomes weak in front of foreign currency then it is called Currency Depreciation

Q.21.Which one is closer to Fixed Exchange rate system

I. Adjustable Peg System

II. Crawling Peg System

III. Both

IV. None

Answer:

I.Adjustable Peg System

Explanation: Fixed Exchange rate system is closer to fixed exchange rate system .It is that rate which is fixed in terms of Gold or any other currency.

Q.22.What is dirty floating

I. Floating of currency in an illegal way

II. Managed floating in the absence of any guideline

III. Floating of goods and services in an unmanaged manner

IV. High Fluctuation in foreign exchange Rate

Answer:

II.Managed floating in the absence of any guideline

Explanation: Dirty floating means managing the floating in the absence of rules and guideline to the determine of other of other countries

Q.23.What do you mean by spot Market

I. Foreign exchange at current price

II. Foreign Exchange at Fixed Price

III. Foreign exchange at base price

IV. Foreign exchange at fluctuating price

Answer:

I. Foreign exchange at current price

Explanation: Whenever the currency is exchanged at current price the it is called Spot Market

Q.24.What is NEER

I. Normal Effective Exchange rate

II. Nominal effective Exchange rate

III. Neutral Effective exchange rate

IV. Normal efficient exchange rater

Answer:

I.Normal Effective Exchange rate

Explanation: It is the measure of average relative strength of given currency with respect to other currencies without eliminating the effect of price change

Q.25.How are the transactions recorded in the balance of payment account?

I. Single Entry System

II. Double Entry system

III. Accounts entry

IV. None

Answer:

II.Double Entry System

Explanation: When the entries are recorded it is in the form of Double Entry System i.e. Debit and Credit

Q.26.Government Financing comes under:

I. Accommodating items

II. Autonomous items

III. Economic Items

IV. Capital Items

Answer:

I.Accommodating items

Explanation : Accommodating items in the balance of payments refer to the transaction that occur because of other activity in the balance of payments

Q.27.Why are exports entered as positive items in the balance of payment account

I. Inflow of foreign exchange in the country

II. Outflow of foreign exchange in the country

III. Internal flow of Foreign Exchange in the country

IV. None

Answer:

I.Inflow of foreign exchange in the country

Explanation: Inflow of foreign exchange in the country so actually they comes under positive items

Q.28.When the balance of payments refer to international economic transactions that take place due to some economic motive it is called

I. Accommodating Items

II. Autonomous Items

III. Economic Items

IV. Capital Items

II.Autonomous Items

Answer:

Explanation: Those items which refer to the international transactions which has an economic motive.