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Economics MCQ Class 12 Chapter 6

1. Hybrid in management of fixed and flexible exchange rate is known as ________.
(A) Managed floating
(B) Crawling Peg
(C) Wider Bands
(D) None of these

2. Which one is a kind of fixed exchange rate?
(a) Gold Standard System of Exchange Rate
(b) Bretton Woods System of Exchange Rate
(c) Both (a) and (b)
(d) None of the above

3. Trade of visible items between the countries is known as ________.
(A) Balance of Payment
(B) Balance of Trade
(C) Deficit Balance
(D) All of these

4. Which one is a demerit of the flexible exchange rate?
(a) Bad Results of Low Rate
(b) Uncertainty
(c) Instability in Foreign Exchange
(d) All the above

5. When the import and export of visible items are equal, the situation is known as _______.
(A) Balance of Trade
(B) Balance of Payment
(C) Trade Surplus
(D) Trade Deficit

6. Foreign exchange is determined by:
(a) Demand for foreign currency
(b) Supply of foreign currency
(c) Demand and supply in the foreign exchange market
(d) None of the above

7. When there is a favourable balance of trade?
(A) X > M
(B) X = M
(C) X < M
(D) None of these

8. Which one is a source of the demand for foreign exchange?
(a) Imports of Goods and Services from Abroad
(b) Investment in Foreign Nations
(c) Gift Scheme to Foreign Nations
(d) All the above

9. When there is unfavourable balance of trade?
(A) X > M
(B) X = M
(C) X < M
(D) None of these

10. The forms of foreign exchange market is/are:
(a) Spot market
(b) Forward market
(c) Both (a) and (b)
(d) None of these

11. The trade of visible and invisible items is known as _________
(A) Balance of Payments
(B) Balance of Trade
(C) Deficit of interest
(D) Profit

12. The foreign exchange rate is determined by:
(a) Government
(b) Bargaining
(c) World Bank
(d) Demand and Supply forces

13. Other things remaining unchanged, when in a country the price of foreign currency rises, national income is:
(A) Likely to rise
(B) Likely to fall
(C) Likely to rise and fall both
(D) Not affected

14. By exchange rate we mean:
(a) How much local currency we have to pay for a foreign currency
(b) How much of a foreign currency we have to pay for another foreign currency
(c) The rate at which foreign currency is bought and sold
(d) All of these

15. Other things remaining the same, when in a country the market price of foreign currency falls, national income is likely:
(A) To rise
(B) To fall
(C) To rise or to fall
(D) To remain affected

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