Balance of Payments (CBSE (Central Board of Secondary Education- Board Exam) Class-12 Economics): Questions 35 - 44 of 44

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Question number: 35

» Balance of Payments » Balance of Payments Account

Essay Question▾

Describe in Detail

List the items of current account of balance of payments account. Also define ‘Balance of trade’.

Explanation

Thecurrent account of balance of payments is account which maintains records of imports and exports of goods and services

Components of Current Account of Balance of trade:

(1) Export and import of goods: - Export of goods are recorded by positive items they result in inflows of foreign exchange in… (104 more words) …

Question number: 36

» Balance of Payments » Foreign Exchange Rate

Essay Question▾

Describe in Detail

Explain the meaning and two merits of fixed foreign exchange rate.

Explanation

Fixed exchange rate is rate of foreign exchange it is fixed by authority of country Merits of fixed exchange rate is given below:

(1) Avoid variation in exchange rate and exchange rate is fixed by government so the exchange rate becomes free from variations.

(2) Makes international trade more predictable… (11 more words) …

Question number: 37

» Balance of Payments » Foreign Exchange Rate

Essay Question▾

Describe in Detail

Explain two sources each of demand and supply of foreign exchange.

Explanation

Two sources of demand for foreign exchange is given below: -

(1) Import payments: - Foreign exchange is demanded for imports and it is for purchasing goods and services from world.

(2) Gifts and Grants: - other sources of demand for foreign exchange is sending gifts and grants to the… (50 more words) …

Question number: 38

» Balance of Payments » Balance of Payments Account

Essay Question▾

Describe in Detail

Give the meaning of factor income to abroad and factor income from abroad. Also give example of each.

Explanation

Factor income to abroad: - In this payments are made to foreign citizens in native country. Example: salary is payed to US citizen in India by Indian company as income to abroad.

Factor income from abroad: - In this payment is accepted by citizen of native country a person who… (20 more words) …

Question number: 39

» Balance of Payments » Determination of Exchange Rate in a Free Market

Essay Question▾

Describe in Detail

State any two problems of barter system of exchange. How does money solve them?

Explanation

The two problems of barter system of exchange are given below:

a. Both sale and purchase are generated together involving double coincidence of wants.

b. There is no common unit of exchange in a barter system so, exchange remains limited.

Use of money overcomes problem of barter system of exchange… (29 more words) …

Question number: 40

» Balance of Payments » Balance of Payments Account

Essay Question▾

Describe in Detail

Distinguish between balance of trade and balance of current account.

Explanation

Characteristics

Balance of trade account

Balance of current account

What is in includes?

Balance of trade account includes visible items of trade

Balance of current account includes transaction of items

What items are available?

export and import items are available.

visible items and invisible items are available.

What it records?… (15 more words) …

Question number: 41

» Balance of Payments » Foreign Exchange Rate

Essay Question▾

Describe in Detail

When exchange rate of foreign currency falls, its demand rises. Explain how.

Explanation

When exchange rate of foreign currency falls which means that foreign currency depreciates the demand for foreign currency increases as it becomes cheaper for the residents of the country like India for example. depreciation of foreign currency leads to increase in demand of it as exports will strike a rise.… (67 more words) …

Question number: 42

» Balance of Payments » Foreign Exchange Rate

Short Answer Question▾

Write in Short

What is fixed exchange rate System?

Question number: 43

» Balance of Payments » Balance of Payments Account

Short Answer Question▾

Write in Short

Name the items included in balance of trade account.

Question number: 44

» Balance of Payments » Balance of Payments Account

Short Answer Question▾

Write in Short

What does balance of payments account of a country record?

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