MCQ on Foreign Exchange Market

mcq on foreign exchange market

Question 1: From which year was the FEMA Promulgated?

(A) 2003

(B) 2002

(C) 2000

(D) 1999

View Answer

(C) 2000

Question 2: Under free exchange market the rate of foreign exchange is determined by __________.

(A) Balance of Payments Theory

(B) Purchasing Power Parity Theory

(C) Mint par Theory

(D) None of the above

View Answer

(B) Purchasing Power Parity Theory

Question 3: The development is ___________.

(A) reduction of prices

(B) deficit financing

(C) loans from World Bank and I.M.F.

(D) reduction in the value of currency in terms of gold

View Answer

(D) reduction in the value of currency in terms of gold

Question 4: Which of the following authority sanctions foreign exchange for import of goods?

(A) Any nationalised Bank

(B) Exchange Bank

(C) Reserve Bank of India

(D) Ministry of Finance

View Answer

(C) Reserve Bank of India

Question 5: The term ‘Paper Gold’ means __________.

(A) special drawing rights of the I.M.F.

(B) special accommodation facility of the World Bank

(C) currencies still on Gold standard

(D) deficit financing

View Answer

(A) special drawing rights of the I.M.F.

Question 6: India, Foreign Investment Promotion Board now works under __________.

(A) Reserve Bank of India

(B) Ministry of External Affairs

(C) Ministry of Commerce

(D) Ministry of Finance

View Answer

(D) Ministry of Finance

Question 7: The Forex Reserve in India have been witnessing continuous growth due to following reasons.

  1. Rise in FDI inflows
  2. Gifts from Foreign Countries
  3. High interest regime in the country
  4. Huge inflows of FIIs funds
  5. Remittances from Indians working abroad

Select the correct answer from the given codes. 

(A) 1, 3, 4, 5

(B) 1, 2, 3, 4

(C)1, 2, 4, 5

(D) 2, 3, 4, 5

View Answer

(A) 1, 3, 4, 5

Question 8: Consider the following statements and choose the correct answer with the help of codes given.

  • Assertion (A): In the recent past, there has been a significant increase in foreign exchange reserve of India.
  • Reason (R): Invisible exports have been much higher than invisible imports in terms of dollars.

(A) Both (A) and (R) are true and (R) is the correct explanation of (A)

(B) Both (A) and (R) are true,but (R) is not the correct explanation of (A)

(C) (A) is true, but (R) is false

(D) (A) is false, but (R) is true

View Answer

(A) Both (A) and (R) are true and (R) is the correct explanation of (A)