MCQ on Balance of Payment

This blog post contains a Balance of Payment MCQ quiz with answers. The quiz covers important topics such as the definition of balance of payments, the components of the balance of payments, and the factors that affect the balance of payments.

Question 1: Which of the following statements is correct about the Balance of Trade of India?

(A) India’s trade balance remained negative for the entire period from 1949-50 to 2015-16

(B) India’s trade balance remained positive for the entire period from 1949-50 to 2015-16

(C) India’s trade balance remained negative for the entire period from 1949-50 to 2015-16 except two years 1972-73 and 1976-77, when it was positive

(D) India’s trade balance remained positive for the entire period from 1949-50 to 2015-16 except two years 1972-73 and 1976-77, when it was negative

Question 2: India’s Trade Policy (2009-14) seeks to

1. Double the country’s share of global trade by 2020.
   
2. Achieve a growth of 25 percent per annum in exports
3. Double Indian exports of goods and services by 2015

Choose the correct statements.

(A) 1 and 2

(B) 2 and 3

(C) 1 and 3

(D) 1, 2 and 3

Question 3: Balance of Payment on capital account includes ___________.

(A) Balances of private direct investments

(B) Private portfolio investments

(C) Government loans to foreign governments

(D) All of the above

Question 4: The term ‘Balance of Payment’ is used in relation to which of the following?

(A) Annual sale of a factory

(B) Tax collection

(C) Export and Imports

(D) None of the above

Question 5: Which one of the following statements is not correct?

(A) The proposals made by the Director General of GATT to resolve the stalled Uruguay talks are referred to as the Dunkel Draft

(B) The Dunkel Draft also included proposals pertaining to intellectual property rights

(C) The Dunkel proposals also include trade related investment measures

(D) The Dunkel proposals also include the proposal that Indo-Pak relation may be strengthened on the basis of Shimla Agreement

Question 6: What have been the reasons of deficit in India’s Balance of Trade in the Past?

(A) Very large rise in imports

(B) Modest growth of exports

(C) High cost and low quantity production

(D) All of the above

Question 7: Balance of payment is defined as __________.

(A) the value of exports minus the value of imports

(B) the difference between the liabilities and assets of a firm

(C) the difference between current expenditure and current revenue in the government

(D) complete record of all economic transactions between the residents of the country and rest of the world

Question 8: India export maximum leather to ___________.

(A) U.S.A.

(B) U.S.S.R.

(C) England

(D) W. Germany

Question 9: Which one of the following groups constitutes the largest item of Export from India?

(A) Engineering Goods and Tea

(B) Tea, Gems and Jewellery

(C) Readymade Garments and Sugar

(D) Readymade Garments, Gems and Jewellery

Question 10: Which among the following does not have a “free trade zone”?

(A) Kandla

(B) Mumbai

(C) Vishakhapatnam

(D) Thiruvananthapuram

Question 11: ‘ECGC’ is related to ___________.

(A) Export promotion

(B) Export financing and insurance

(C) Export quality certification

(D) Export statistics publication

Question 12: Which organisation promotes foreign trade? 

(A) ECGC

(B) MMTC

(C) STC

(D) All of the above

Question 13: Which one of the following institutions related to export financing and insurance?

(A) ECGC

(B) GAIL

(C) CBDT

(D) IDBI

Question 14: Invisible export means export of ____________.

(A) Services

(B) Prohibited goods

(C) Unrecorded goods

(D) Goods through smuggling

Question 15: Balance of payment includes ____________.

(A) Visible Trade

(B) Invisible Trade

(C) Debts

(D) All of the above

Question 16:  A letter of credit has to be produced by _____________.

(A) An exporter

(B) An importer

(C) Custom authorities

(D) Shipping company

Question 17: Which one of the following set of commodities are exported to India by arid and semi-arid countries in the Middle East? 

(A) Raw Wool and Carpets

(B) Fruits and Palm oil

(C) Precious stones and Pearls

(D) Perfume and Coffee

Question 18: Consider the following statements.
The Indian rupee is fully convertible

1. In respect of Current Account of Balance of Payment
   
2. In respect of Capital Account of Balance of Payment
   
3. Into gold

Which of these statement(s) is/are correct?

(A) Only 1

(B) Only 2

(C) 1 and 2

(D) 1, 2 and 3

Question 19: Which one of the following countries is the largest trading partner of India?

(A) U.S.A.

(B) U.K.

(C) France

(D) China

Question 20: Among the following countries, which was the highest crude oil supplier to India during 2017-18?

(A) Saudi Arabia

(B) Iran

(C) Iraq

(D) Kuwait

Question 21: Which of the following commodities has highest export from India in 2017? 

(A) Agriculture and allied products

(B) Engineering goods

(C) Textiles

(D) Chemicals

Question 22: Which of the following continued to be the major component of India’s external credit till 2017?

(A) NRI deposits

(B) Short term debt

(C) Trade Credit

(D) Commercial borrowing