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Class 12th Economics: Balance of Payment and Foreign Exchange Quiz

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Class 12th Economics: Balance of Payment and Foreign Exchange Quiz

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Questions and Answers

What does the balance of payments (BoP) indicate?

Difference between imports and exports of goods and services (correct)

Net worth of a country's economy

Total amount of money in circulation within a country

Total government revenue minus total government expenditure

What is the current account of the balance of payments (BoP) composed of?

Fixed and variable costs

Public and private savings

Capital flows and financial investments

Goods, services, primary income, and secondary income (correct)

What is the primary objective of the balance of payments (BoP)?

To regulate the exchange rate

To measure the economic performance of a country (correct)

To control inflation

To manage government expenditure

Study Notes

Balance of Payments (BoP)

The balance of payments (BoP) indicates the inflows and outflows of a country's goods, services, and financial transactions with the rest of the world.

Composition of Current Account

The current account of the BoP is composed of:
- Trade in goods (exports and imports)
- Trade in services (such as tourism, transportation, and insurance)
- Income (earnings on investments and compensation of employees)
- Transfers (remittances, foreign aid, and other one-way flows)

Primary Objective of BoP

The primary objective of the BoP is to reveal the overall surpluses or deficits in a country's international transactions, which can help policymakers assess the country's economic performance and make informed decisions.

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Description

Test your knowledge on balance of payments and foreign exchange with this quiz designed for Class 12 Economics students. Assess your understanding of key concepts and principles related to international trade and finance.