Multiple Choice Questions and Answers (MCQs) on Balance of Payments For Civil Services
Question 1 : Which of the following does not form part of current account under balance of payments?
a) Export and import of goods
b) Export and import of services
c) Income receipts and payments
d) Capital receipts and payments
Answer : d
Question 2 : Which of the following pairs is not correctly matched with regard to balance of payment accounts?
a) Import of goods and services – Debit in the current account
b) Receipts of transfer payments – Credit in the current account
c) Direct investment receipt – Credit in the capital account
d) Portfolio investment payments – Debit in the current account
Answer : d
Question 3 : A country is said to be in debt trap if
a) It has to abide by the conditionality imposed by the International Monetary Fund
b) It is required to borrow money to make interest payments on outstanding loans
c) It has been refused loans or aid by creditors
d) The World Bank charges a very high rate of interest on outstanding as well as new loans
Answer : b
Question 4 : Balance in capital account refer to the
a) Nation’s net exports of goods and services
b) Nation’s net exports of financial claims
c) Nation’s net exports of international official reserve assets
d) Nation’s sum of net exports of goods, services and financial claims
Answer : b
Question 5 : Which of the following are the components of balance of payments?
- Financial capital transfer
- External loan and investment
- Foreign institutional investment
- Issuing of external bonds
- Export and imports of goods and services
Select the correct answer using the codes given below:
a) 1, 2, and 3 only
b) 2, 3, and 4 only
c) 1, 4, and 5 only
d) 1, 2, 3, 4, and 5
Answer : d
Question 6 : Consider the following components of India’s external debt in terms of their share at end March 2017:
- Multilateral debt
- Bilateral debt
- External commercial borrowings
- NRI deposits
Which of the following is the correct descending order of the above:
a) 1-2-3-4
b) 3-4-1-2
c) 3-1-2-4
d) 1-3-2-4
Answer : b
Question 7 : Consider the following statements regarding post-liberalization India’s balance of payments position:
- The current account deficit is on account of net import of services.
- The capital account surplus is on account of large amount of external assistance received on bilateral basis.
- The balance of payments situation has improved post-liberalization
Select the correct answer using the codes given below:
a) 3 only
b) 2 and 3
c) 1 and 2
d) 1 and 3
Answer : a
Question 8 : Consider the following statements:
- India’s net exports of goods have a negative balance
- India’s net export of services have a positive balance
- India is the largest receiver of remittances around the world
Select the correct answer using the codes given below:
a) 2 only
b) 2 and 3
c) 1 and 2
d) a, 2, and 3
Answer : d
Question 9 : Which of the following steps can be taken to reduce current account deficit in India?
- Setting the import quota limits
- reducing export duty on products
- Setting restrictions on repatriation of profits earned on foreign investment
Select the correct answer using the codes given below:
a) 2 only
b) 2 and 3
c) 1 and 2
d) 1, 2, and 3
Answer : d