FOREIGN EXCHANGE AND BALANCE OF PAYMENT
ONE MARKS QUESTIONS: -
1. What is exchange rate?
2. What is foreign exchange market?
3. What is foreign exchange equilibrium rate?
4. What is fixed exchange rate and flexible exchange rate?
5. What is spot market and forward Market of foreign exchange?
6. What are the visible and invisible items of International trade?
7. What is meant by Hedging function of foreign exchange market?
8. What is meant by appreciation of a currency?
9. What is parity Value?
3 OR 4 Marks questions: -
1. What is foreign exchange market? Explain the main function of the foreign market.
2. Why is foreign exchange demanded? OR Give three reasons why people desire to have foreign exchange?
3. State the merits and demerits of fixed foreign exchange rate.
4. State the merits and demerits of flexible foreign exchange rate.
5. Explain the meaning of crawling peg and managed float.
BALANCE OF PAYMENT
1. Define balance of payment?
2. What is meant by balance of trade?
3. What is meant by Surplus BOP?
4. What is meant by deficit BOP?
5. What is Current and Capital Accounts of Balance of Payment?
6. What are Surplus and Deficit Balance of payments
7. What are Autonomous and Accommodating items of balance of payment?
8. What are the Visible and invisible items of the export and imports?
9. Define balance of payment on current account.
10. Define balance of payments on current account.
3 OR 4 MARKS QUESTIONS: -
1. What are the Visible and invisible items of the export and imports? Give examples.
2. Briefly explain components of current account of BOP?
3. Briefly explain components of Capital account of BOP?
4. Distinguish between current account of BOP and Capital account of BOP.
5. Explain Accommodating and Autonomous items.
6. Distinguish between favorable and unfavorable BOP.
Q. Explain the determination of foreign exchange rate.
Ans.: - Equilibrium exchange rate occurs where supply of and demand of foreign exchange are equals to each others.
Demand for Foreign Exchange rate: -
1. Payments of International loan.
2. Gifts and grants to rest of the world.
3. Investment in the rest of the world.
4. Direct purchases abroad as well as imports from rest of the world.
Supply of foreign exchange rate: -
1. Purchases of domestic goods by the foreigners.
2. Direct foreign investment as well as portfolio investment in the home country.
3. Speculative purchases of foreign exchange.
4. Transfer of foreign exchange by the residents of country abroad.



GOVERNMENT AND THE ECONOMY. (Total Marks = 8 )
1 Mark Questions: -
1. What is budget?
2. What is government budget?
3. What is meant by fiscal year in India?
4. Name the two part of government budget.
5. What is meant by Tax and Non-Plan?
6. Define revenue budget.
7. Define capital budget.
8. What is deficit budget?
9. What is surplus budget?
10. What is balance budget?
11. Why recoveries of loan treated as capital transfer?
12. Why borrowing by the government is capital receipt?
13. Classify public expenditure public expenditure.
14. Define development expenditure.
15. What is non – development expenditure
16. Define plan and non-plan expenditure.
17. Give two examples of Capital expenditure.
18. Define budget deficit.
19. Define fiscal deficit.
20. Define revenue deficit.
21. Define primary deficit.
3 or 4 Marks questions: -
1. Define government budget. State any four objectives of budget.
2. What is the importance of government budget?
3. What are the difference between revenue budget and capital budget?
4. What are the differences between revenue receipt and capital receipt?
5. Why repayment of loan a capital expenditure?
6. What is revenue deficit? What is its implication?
7. What is Primary deficit? What is the significance of Primary deficit?
8. How may a deficit be financed?
9. Give reasons, categories the following into revenue Expenditure and Capital expenditure.
A. Subsidies.
B. Grant given to the state govt.
C. Repayment of loan.
D. Construction of school building.

Compiled by: Ramesh Kumar
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MONEY AND BANKING
One Mark questions:
1. Define Money.
2. Define face value of money.
3. Define intrinsic value.
4. Define Money Supply.
5. What is Barter system?
6. What is credit money?
7. What is full bodied of money?
8. What is credit money?
9. What is the main function of money in an economic system?
10. What is meant by medium of exchange?
11. What is banking?
12. Name the primary function of money.
13. Define a central bank.
14. Is money a commodity?
15. What are the scheduled banks?