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

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

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

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

4. 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

5. Foreign exchange is determined by

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

7. Which of the following is Incorrect?

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

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

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

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

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

13. Which of the following is Incorrect?

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

15. Net Exports and Net Invisible Cumulatively account as

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

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

18. 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 ________

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

20. When There is a favourable balance of trade