External sector, BoP and exchange rates — UPSC Prelims PYQs

The artificially fixed rupee-sterling exchange rate prescribed by the Hilton-Young Commission (1926) was adopted by the British Government for which one of the following reasons?

Consider the following statements: Statement-I: Switzerland is one of the leading exporters of gold in terms of value. Statement-II: Switzerland has the second largest gold reserves in the world. Which one of the following is correct in respect of the above statements?

Consider the following statements: Statement-I: India accounts for 3.2% of global export of goods. Statement-II: Many local companies and some foreign companies operating in India have taken advantage of India’s ‘Production-linked Incentive’ scheme. Which one of the following is correct in respect of the above statements?

Consider the following statements: 1. Tight monetary policy of the US Federal Reserve could lead to capital flight. 2. Capital flight may increase the interest cost of firms with existing External Commercial Borrowings (ECBs). 3. Devaluation of domestic currency decreases the currency risk associated with ECBs. Which of the statements given above are correct?

With reference to the Indian economy, consider the following statements: 1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee. 2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness. 3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER. Which of the statements are correct?

Consider the following statements: The effect of the devaluation of a currency is that it necessarily: 1. Improves the competitiveness of domestic exports in the foreign markets. 2. Increases the foreign value of the domestic currency 3. Improves the trade balance Which of the above statements is/are correct?

With reference to the international trade of India at present, which of the following statements is/are correct? 1. India’s merchandise exports are less than its merchandise imports. 2. India’s imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years. 3. India’s exports of services are more than its imports of services. 4. India suffers from an overall trade/current account deficit. Select the correct answer using the code given below:

In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis? 1. The foreign currency earnings of India’s IT sector 2. Increasing the government expenditure 3. Remittances from Indians abroad Select the correct answer using the code given below.

Which one of the following is not the most likely measure the Government/ RBI takes to stop the slide of the Indian rupee?

Consider the following statements: 1. Purchasing Power Parity (PPP) exchange rates are calculated by comparing the prices of the same basket of goods and services in different countries. 2. In terms of PPP dollars, India is the sixth largest economy in the world. Which of the statements given above is/are correct?

Consider the following statements: 1. Most of India’s external debt is owed by governmental entities. 2. All of India’s external debt is denominated in US dollars. Which of the statements given above is/are correct?

Consider the following statements: 1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years. 2. The Government does not impose any customs duty on all the imported edible oils as a special case. Which of the statements given above is/are correct?

Which of the following has/have occurred in India after its liberalisation of economic policies in 1991? 1. Share of agriculture in GDP increased enormously. 2. Share of India’s exports in world trade increased. 3. FDI inflows increased. 4. India’s foreign exchange reserves increased enormously. Select the correct answer using the codes given below:

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. Reducing revenue expenditure 2. Introducing new welfare schemes 3. Rationalising subsidies 4. Reducing import duty Select the correct answer using the code given below.

Which of the following best describes the term ‘import cover’, sometimes seen in the news?

Convertibility of rupee implies:

The problem of international liquidity is related to the nonavailability of:

With reference to Balance of Payments, which of the following constitutes/constitute the Current Account? 1. Balance of trade 2. Foreign assets 3. Balance of invisibles 4. Special Drawing Rights Select the correct answer using the code given below.

The balance of payments of a country is a systematic record of:

Which one of the following groups of items is included in India’s foreign-exchange reserves?

Which of the following constitute a Capital Account? 1. Foreign Loans 2. Foreign Direct Investment 3. Private Remittances 4. Portfolio Investment Select the correct answer using the codes given below:

Consider the following statements: The price of any currency in international market is decided by the 1. World Bank 2. Demand for goods/services provided by the country concerned 3. Stability of the government of the concerned country 4. Economic potential of the country in question Which of the statements given above are correct?

In terms of economy, the visit by foreign nationals to witness the XIX common Wealth Games in India amounted to:

A “closed economy” is an economy in which:

Consider the following actions which the government can take: 1. Devaluing the domestic currency. 2. Reduction in the export subsidy. 3. Adopting suitable policies which attract greater FDI and more funds from FIIs. Which of the above action(s) can help in reducing the current account deficit?