Description : Under flexible exchange rate system, the exchange rate is determined by - (1) the Central Bank of the country (2) the forces of demand and supply in the foreign exchange market (3) the price of gold (4) the purchasing power of currencies
Last Answer : (2) the forces of demand and supply in the foreign exchange market Explanation: A floating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to ... by the foreign-exchange market through supply and demand for that particular currency relative to other currencies.
Description : Full convertibility of a rupeee means - (1) purchase of foreign exchange for rupees freely (2) payment for imports in terms of ruppes (3) repayment of loans in terms of rupees (4) determination of rate of exchange between rupee and foreign currencies freely by the market forces of demand and supply
Last Answer : (4) determination of rate of exchange between rupee and foreign currencies freely by the market forces of demand and supply Explanation: The full convertibility of the Indian currency means ... governmental control. Presently, the issue of capital account convertibility is in the discussion stage.
Description : Full convertibility of a rupeee means (1) purchase of foreign exchange for rupees freely (2) payment for imports in terms of ruppes (3) repayment of loans in terms of rupees (4) determination of rate of exchange between rupee and foreign currencies freely by the market forces of demand and supply
Last Answer : determination of rate of exchange between rupee and foreign currencies freely by the market forces of demand and supply
Description : When the exchange rate is determined by the market forces of demand and supply, it is known as : a) Real exchange rate b) Nominal exchange rate c) Superfluous exchange rate d) Floating exchange rate
Last Answer : d) Floating exchange rate
Last Answer : a) Real exchange rate
Description : Given an initial equilibrium in the money market and foreign exchange market, suppose the Federal Reserve increases the money supply of the United States. Under a floating exchange-rate system, the ... C. Be officially devalued by the government D. Be officially revalued by the government
Last Answer : B. Depreciate in value relative to other currencies
Description : What is cross rate ? (A) A rate of exchange derived from central bank (B) A rate of exchange between two currencies, other than those that form a market's principal rates (C) A rate of ... for buying currencies (D) A rate of exchange quoted by a dealer in foreign exchange for selling currencies
Last Answer : Answer: A rate of exchange between two currencies, other than those that form a markets principal rates
Description : The market equilibrium for a commodity is determined by : (1) The market supply of the commodity. (2) The balancing of the forces of demand and supply for the commodity (3) (3) The intervention of the Government. (4) (4) The market demand of the commodity.
Last Answer : (2) The balancing of the forces of demand and supply for the commodity Explanation: Market Equilibrium is determined when the quantity demanded of a commodity becomes equal to the quantity ... equilibrium is known as equilibrium price and the corresponding quantity is known as equilibrium quantity.
Description : The market equilibrium for a commodity is determined by: (1) The market supply of the commodity. (2) The balancing of the forces of demand and supply for the commodity (3) The intervention of the Government. (4) The market demand of the commodity.
Last Answer : The balancing of the forces of demand and supply for the commodity
Description : Market where the price of a commodity is determined by free play of the forces of supply and demand is called?
Last Answer : Free Market.
Description : Under managed floating exchange rates, if the rate of inflation in the United States is less than the rate of inflation pf its trading partners, the dollar will likely: A. Appreciate against ... currencies C. Be officially revalued by the government D. Be officially devalued by the government
Last Answer : A. Appreciate against foreign currencies
Description : In a Laissez-faire economy (1) the customers take all the decisions regarding production of all the commodities (2) the Government does not interfere in the free functioning of demand and ... of various commodities produced (4) the Government controls the allocation of all the factors of production
Last Answer : the Government does not interfere in the free functioning of demand and supply forces in the market
Description : Under the historic adjustable pegged exchange-rate system, member countries were permitted to correct persistent and sizable payment deficits (i.e., fundamental disequilibrium) by: A. Officially ... depreciate in the free market D. Allowing their currencies to appreciate in the free market
Last Answer : B. Officially devaluing their currencies
Description : Purchasing Power Parity theory is related with - (1) Interest rate (2) Bank rate (3) Wage rate (4) Exchange rate
Last Answer : (4) Exchange rate Explanation: Purchasing power parity (PPP) is an economic theory and a technique used to determine the relative value of currencies, estimating the amount of adjustment needed on the ... that PPP rate, an amount of money thus has the same purchasing power in different countries.
Description : Purchasing Power Parity theory is related with (1) Interest rate (2) Bank rate (3) Wage rate (4) Exchange rate
Last Answer : Exchange rate
Description : Speculative demand for cash is determined by - (1) The rate of interest (2) the level of income (3) the general price level (4) the market conditions
Last Answer : (1) The rate of interest Explanation: Speculative demand is the demand for financial assets, such as securities, money or foreign currency that is not dictated by real transactions such as trade, or financing. ... rate, more people will expect a rise in interest rate (or a fall in bond prices).
Description : Speculative demand for cash is determined by (1) The rate of interest (2) the level of income (3) the general price level (4) the market conditions
Last Answer : The rate of interest
Description : Under a pegged exchange-rate system, which does not explain why a country would have a balance-of payments deficit? A. Very high rates of inflation occur domestically B. Foreigners ... . Technological advance is superior abroad D. The domestic currency is undervalued relative to other currencies
Last Answer : The domestic currency is undervalued relative to other currencies
Description : In a Capitalistic Economy, the prices are determined by : (1) Demand and Supply (2) Government Authorities (3) Buyers in the Market (4) Sellers in the Market
Last Answer : (1) Demand and Supply Explanation: Capitalism generally refers to economic system in which the means of production are largely or entirely privately owned and operated for a profit, structured on the ... and services lead to higher prices and lower demand for certain goods lead to lower prices.
Last Answer : Demand and Supply
Description : Open market operations of RBI refer to buying and selling of - (1) Commercial bills (2) Foreign exchange (3) Gold (4) Government bonds
Last Answer : (4) Government bonds Explanation: OMOs are the market operations conducted by the Reserve Bank of India by way of sale/ purchase of Government securities to/ from the market with an objective to ... are tight, the RBI will buy securities from the market, thereby releasing liquidity into the market.
Description : Open market operations of RBI refer to buying and selling of (1) Commercial bills (2) Foreign exchange (3) Gold (4) Government bonds
Last Answer : Government bonds
Description : Equilibrium price means - (1) Price determined by demand and supply (2) Price determined by Cost and Profit (3) Price determined by Cost of production (4) Price determined to maximize profit
Last Answer : (1) Price determined by demand and supply Explanation: Equilibrium price is a state in economy where the supply of goods matches demand. When a major index experiences a period of consolidation or sideways ... short, it is the market price at which the supply of an item equals the quantity demanded.
Description : Equilibrium price means (1) Price determined by demand and supply (2) Price determined by Cost and Profit (3) Price determined by Cost of production (4) Price determined to maximise profit
Last Answer : Price determined by demand and supply
Description : Which one of the following is not a function of the central bank in an economy? (1) Dealing with foreign exchange (2) Controlling monetary policy (3) Controlling government spending (4) Acting as a banker's bank
Last Answer : (3) Controlling government spending Explanation: A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
Description : Which one of the following is not a function of the central bank in an economy ? (1) Dealing with foreign exchange (2) Controlling monetary policy (3) Controlling government spending (4) Acting as a banker’s bank
Last Answer : Controlling government spending
Description : According to monetary approach of Balance of Payments, the demand for money is a stable function of (a) income, prices and rate of interest (b) income and prices (c) prices and rate of interest (d) income, prices and foreign exchange reserves
Last Answer : income, prices and rate of interest
Description : Demand in Economics means : (1) Aggregate demand (2) Market demand (3) Individual demand (4) Demand backed by purchasing power
Last Answer : (4) Demand backed by purchasing power Explanation: Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.
Last Answer : Demand backed by purchasing power
Description : The purpose of devaluation is to : (1) be little foreign currencies (2) encourage exports (3) discourage exports (4) encourage import
Last Answer : (2) encourage exports Explanation: Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. It makes exports more competitive and imports more expensive.
Last Answer : encourage exports
Description : Floating Exchange Rate is also referred to as - (1) Flexible Exchange Rate (2) Fixed Exchange Rate (3) Real Exchange Rate (4) Controlled Exchange Rate
Last Answer : (1) Flexible Exchange Rate Explanation: A floating exchange rate or fluctuating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the ... and foreign business cycles, and to preempt the possibility of having a balance of payments crisis.
Description : Floating Exchange Rate is also referred to as (1) Flexible Exchange Rate (2) Fixed Exchange Rate (3) Real Exchange Rate (4) Controlled Exchange Rate
Last Answer : Flexible Exchange Rate
Description : ____________ rate is the ratio for exchange of two currencies.
Last Answer : Exchange,
Description : Which of these is not the function of IMF? (a) It provides mechanism for orderly adjustment of exchange rate (b) It provides mechanism for international consultation (c) It provides forum for ... of international trade disputes (d) It is a reservoir of the currencies of all the member countries
Last Answer : (c) It provides forum for settlement of international trade disputes
Description : Which of the following is not helpful in controlling money supply? (1) Free market policy (2) CRR (3) Bank Rate (4) Change in margin requirement
Last Answer : (1) Free market policy Explanation: The Central Bank of a country regulates money supply with the help of open market operations, changing the reserve requirements (CRR) and changing discount rate ( ... In India, the Reserve Bank of India has recently been resorting more to open market operations.
Description : By increasing the 'Bank Rate', the RBI can: a) provide incentives to commercial banks to lend more to public b) provide incentives to commercial banks to lend less to public c) increase the money supply in the market d) none of the above
Last Answer : b) provide incentives to commercial banks to lend less to public Bank rate is the rate at which commercial banks can borrow money from the RBI. If the rate is higher, then taking money from RBI becomes difficult, so the banks will lend less to public. And vice-versa.
Description : Which of the following is not helpful in controlling money supply ? (1) Free market policy (2) CRR (3) Bank Rate (4) Change in margin requirement
Last Answer : Free market policy
Description : Market equilibrium of a commodity is determined by (a) Balancing of demand and supply position ; (b) Aggregate demand ; (c) Aggregate supply; (d) Government intervention
Last Answer : (a) Balancing of demand and supply position ;
Description : According to the effective demand principle: a) at a certain price, the output shall not be determined by any known factor b) at a certain price, the output will remain unaffected by rise or ... certain price, equilibrium output will be solely determined by the aggregate demand d) none of the above
Last Answer : c) at a certain price, equilibrium output will be solely determined by the aggregate demand
Description : )The government set up a committee headed by the Chairman, Central Board of Direct Taxes some time back to go into - (1) codification of tax laws (2) the entire structure of tax ... generation of black money, its transfer abroad and bringing back such money into India's legitimate financial system
Last Answer : (4) aspects of generation of black money, its transfer abroad and bringing back such money into India's legitimate financial system Explanation: The Central Board of Direct Taxes (CBDT) ... steps to prevent generation of illicit funds through transactions in property, bullion and equity market.
Description : The government set up a committee headed by the Chairman, Central Board of Direct Taxes some time back to go into - (1) codification of tax laws (2) the entire structure of tax ... generation of black money, its transfer abroad and bringing back such money into India's legitimate financial system
Last Answer : aspects of generation of black money, its transfer abroad and bringing back such money into India’s legitimate financial system
Description : In the long run price is governed by …………. (a) Cost of Production ; (b) Demand supply forces ; (c) Marginal utility ; (d) None
Last Answer : (a) Cost of Production ;
Description : Demand of commodity mainly depends upon - (1) Purchasing will (2) Purchasing power (3) Tax policy (4) Advertisement
Last Answer : (2) Purchasing power Explanation: The demand of commodity mainly stems from the consumption capacity of the buyer. Demand is equal to desire plus ability to pay plus will to spend. Demand for a commodity depends upon number of factors called Determinants.
Description : Demand of commodity mainly depends upon– (1) Purchasing will (2) Purchasing power (3) Tax policy (4) Advertisement
Last Answer : Purchasing power
Description : The process by which the central bank of a country controls the supply of money in the economy by exercising its control over interest rates in order to maintain price stability and achieve high economic ... A. Economic Policy B. Monetary Policy C. Fiscal Policy D. Credit Policy E. Budgetary Policy
Last Answer : B. Monetary Policy Explanation: Monetary Policy is the process by which monetary authority of a country, generally a central bank controls the supply of money in the economy by exercising its control over ... Bank of India (RBI). is so designed as to maintain the price stability in the economy.
Description : Which of the following constitutes Foreign Direct Investment? A. A speculator trying to make a profit by buying company shares on a foreign stock exchange. B. A UK energy company buying territory ... D. A company signing an agreement with a wholesaler to distribute its products in foreign markets.
Last Answer : A tourist purchasing foreign currency to spend on a holiday abroad.
Description : Sellers market denotes a situation where : (1) commodities are available at competitive rates (2) demand exceeds supply (3) supply exceeds demand (4) supply and demand are evenly balanced
Last Answer : (2) demand exceeds supply Explanation: Seller's market is a market which has more buyers than sellers. High prices result from this excess of demand over supply. The opposite of the seller's market is the buyer's market, where supply greatly exceeds demand.
Description : In equilibrium, a perfectly competitive firm will equate - (1) marginal social cost with marginal social benefit (2) market supply with market demand (3) marginal profit with marginal cost (4) marginal revenue with marginal cost
Last Answer : (4) marginal revenue with marginal cost Explanation: A perfectly competitive firm's supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost ... marginal cost curve. The marginal cost curve is thus the perfectly competitive firm's supply curve.