Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

Match the following

1. Trade balance A. Capital account
2. Foreign direct investment B. Increase in exports
3. Indian travelling to Japan C. Difference b/w export and import of visible items
4. Devaluation of rupee D. Debit side of Bop account
Options:

1-C, 2-A, 3-D, 4-B

1-A, 2-B, 3-D, 4-C

1-B, 2-A, 3-C, 4-D

1-C, 2-B, 3-A, 4-D

Correct Answer:

1-C, 2-A, 3-D, 4-B

Explanation:

Difference b/w export and import of visible items is called as balance of trade or trade balance

FDI comes under capital account of the BoP

Indian travelling to japan results in outflow of foreign exchange, which means it will be recorded on the debit side of the BoP account

Devaluation of rupee results in rise in exports of the country