Banking Awareness - Industrial Development and Foreign Trade

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Question - 1

Foreign Direct Investment (FDI) is investment directly into production in a country by a company located in another country, then which one of the following modes is correct about the FDI?

  • A Buying a company in the target country
  • B Expanding operations of an existing business in that country
  • C Investing in the shares and stocks of a company in the target country
  • D Both '1' and '2'.
  • E Neither '1' nor '2'

Question - 2

Which one of the following factors is taken into account to calculate the Balance of Payment (BoP) of a country?

  • A Current account
  • B Changes in the foreign exchange
  • C Errors and omissions
  • D All of these
  • E None of these

Question - 3

BoP (Balance of Payment) refers to

  • A Transaction in the flow of capital
  • B Transactions relating to receipts and payment of invisible
  • C Transactions relating only to exports and imports
  • D Systematic record of all its economic transaction with the rest of the world
  • E All of the above

Question - 4

Consider the following statements
I. Nominal Effective Exchange Rate (NEER) is the weighted average of bilateral exchange rate of the home currency in the terms of foreign currencies.
II. Real Effective Exchange Rate (REER) is used to measure the movements of exchange rate as well as inflation differentials between India and its major trading partners.
Which of the statements given is/are correct?

  • A Only I
  • B Only II
  • C Both I and II
  • D Neither I nor II
  • E Either I or II

Question - 5

Which of the following is the component of India's Foreign Exchange Reserve?

  • A Special drawing rights
  • B Reserve tranche position of India in IMF
  • C Indian currency held by foreign countries
  • D Both '1' and '2'
  • E Neither '1' nor '2'

Question - 6

All of the following are useful options for the government to pursue to bolster foreign exchange reserves, except to

  • A Impose exchange controls
  • B Impose export controls
  • C Adjust the exchange rate
  • D Barrow foreign currencies 
  • E Permit a free floating exchange rate

Question - 7

The balance of international indebtedness is a record of a country's international

  • A Investment position over a period of time
  • B Investment position at a fixed point in time
  • C Trade position over a period of time
  • D Trade position at fixed point in time
  • E None of the above

Question - 8

Which of the following is considered as a capital inflow?

  • A A sale of US financial assets to a foreign buyer
  • B A loan from a US bank to a foreign borrower
  • C A purchase of foreign financial assets by a US buyer
  • D A U S citizen's repayment of a loan from a foreign bank 
  • E None of the above

Question - 9

Which balance of payments item does not directly enter into the calculation of the US gross domestic product?

  • A Merchandise import 
  • B Shipping and transportation receipts
  • C Direct foreign investment
  • D Service exports
  • E All of the above

Question - 10

On the balance of payments statements, merchandise imports are classified in the

  • A Current account
  • B Capital account
  • C Unilateral transfer account 
  • D Official settlements account
  • E None of the above