CUET 2026 Economics Balance of Payments – Open Economy Macronomics MCQ Question Answers

1. the country could use its reserves of foreign exchange in order to balance any deficit in its balance of payments. The reserve bank sells foreign exchange when there is a deficit. This is called ________

2. Which one is a demerit of the fixed exchange rate?

3. Which of the following is Incorrect?

4. The purchasing Power (PPP) theory is used to make _______predictions about exchange rates in a _______exchange rate system

5. Under clean floating, the exchange rate is determined by _________ without any central bank intervention.

6. Foreign exchange is determined by

7. Other things remaining unchanged, when in a country the price of foreign currency rises, national income is:

8. Which one is a source of the demand of foreign exchange?

9. A surplus current account means that the nation is a __________ to other countries

10. In this exchange rate system, the _________ fixes the exchange rate at a particular level

11. Transfer payments are the receipts which the residents of a country get for ‘free’, without having to provide any goods or services in return. Here Transfer Payments Included

12. In a fixed exchange rate system, when some government action increases the exchange rate (thereby, making domestic currency cheaper) is called?

13. Which one is a basis of fixed EXCHANGE RATE?

14. Which of the following Is a Merit of Fixed Exchange Rate System?

15. Net Exports and Net Invisible Cumulatively account as

16. The balance of payments Record the transactions in goods, services and assets between residents of a country

17. Which of the following is Incorrect?

18. When There is a favourable balance of trade

19. This gives investors the opportunity to choose between domestic and foreign assets

20. Balance of Trade means The Net difference between Trading account and profit loss account