Question 1

The statutory basis for administration of foreign exchange in India is

Accepted Answer

A) Foreign Exchange Regulation Act, 1973 
B) Conservation of foreign Exchange and Prevention of Smuggling Act. 
C) Foreign Exchange Management Act, 1999 
D) Exchange Control Manual 
A) Foreign Exchange Regulation Act, 1973 
B) Conservation of foreign Exchange and Prevention of Smuggling Act. 
C) Foreign Exchange Management Act, 1999 
D) Exchange Control Manual C

Question 2

Foreign exchange transactions involve monetary transactions

Accepted Answer

A) among residents of the same country 
B) between residents of two countries only 
C) between residents of two or more countries 
D) among residents of at least three countries 
A) among residents of the same country 
B) between residents of two countries only 
C) between residents of two or more countries 
D) among residents of at least three countries B

Question 3

Flexible Exchange Rate System is also known as:

Accepted Answer

A) Pegged Exchange Rate System 
B) Dirty Floating 
C) Floating Exchange Rate 
D) Both (b) and (c 
A) Pegged Exchange Rate System 
B) Dirty Floating 
C) Floating Exchange Rate 
D) Both (b) and (c C

Question 4

If rupee is getting depreciated fast and is considered undesirable by the government, the RBI may be advised to

Accepted Answer

A) Sell dollars in the foreign exchange market 
B) Purchase dollars 
C) Print more currency notes 
D) Raise tariffs on imports 
A) Sell dollars in the foreign exchange market 
B) Purchase dollars 
C) Print more currency notes 
D) Raise tariffs on imports

Question 5

The larger fluctuations in portfolio value of foreign exchange of financial institutions leads to

Accepted Answer

A) greater liquidity of assets 
B) greater volatility of rates 
C) lesser volatility of rates 
D) lesser liquidity of assets 
A) greater liquidity of assets 
B) greater volatility of rates 
C) lesser volatility of rates 
D) lesser liquidity of assets

Question 6

When one country manipulates exchange rate against the interest of other country, is known as

Accepted Answer

A) managed floating 
B) dirty floating 
C) wide band 
D) crawling peg 
A) managed floating 
B) dirty floating 
C) wide band 
D) crawling peg

Question 7

Other things remaining the unchanged, when in a country the price of foreign currency rises, national income is:

Accepted Answer

A) Likely to rise 
B) Likely to fall 
C) Likely to rise or to fall 
D) Not affected 
A) Likely to rise 
B) Likely to fall 
C) Likely to rise or to fall 
D) Not affected

Question 8

Buyers and sellers of foreign exchange are

Accepted Answer

A) central banks 
B) commercial banks 
C) brokers 
D) all of them 
A) central banks 
B) commercial banks 
C) brokers 
D) all of them

Question 9

In a flexile exchange rate regime

Accepted Answer

A) central government control the rate 
B) state government control the rate 
C) government do not have any intervention 
D) central bank control the rate 
A) central government control the rate 
B) state government control the rate 
C) government do not have any intervention 
D) central bank control the rate

Question 10

A foreign currency account maintained by a bank abroad is its

Accepted Answer

A) nostro account 
B) vostro account 
C) loro account 
D) foreign bank account 
A) nostro account 
B) vostro account 
C) loro account 
D) foreign bank account

Question 11

A change from Rs. 140 = 2 £ to Rs. 60 = 1 £ indicates that Rs. is

Accepted Answer

A) Appreciated 
B) Depreciated 
C) Neither 
D) Either (a) or (b) 
A) Appreciated 
B) Depreciated 
C) Neither 
D) Either (a) or (b)

Question 12

In which of the following items raises the supply of foreign exchange ?

Accepted Answer

A) Import of goods from China 
B) Indian students going to USA for MBA 
C) Donation of 50 million $ received from Microsoft 
D) Purchase of land in England 
A) Import of goods from China 
B) Indian students going to USA for MBA 
C) Donation of 50 million $ received from Microsoft 
D) Purchase of land in England

Question 13

Other things remaining the same, when in a country the market price of foreign currency falls, national income is likely

Accepted Answer

A) to rise 
B) to fall 
C) to rise or to fall 
D) to remain unaffected 
A) to rise 
B) to fall 
C) to rise or to fall 
D) to remain unaffected

Question 14

Demand for foreign currency depends upon:

Accepted Answer

A) repayment of international loans 
B) investment in rest of the world 
C) direct foreign investment in the domestic economy 
D) both (a) and (b) 
A) repayment of international loans 
B) investment in rest of the world 
C) direct foreign investment in the domestic economy 
D) both (a) and (b)

Question 15

A change from Rs. 60 = 1 dollar to Rs 62 = dollars indicates that Rs has

Accepted Answer

A) Appreciated 
B) Depreciated 
C) Neither 
D) Either a or b 
A) Appreciated 
B) Depreciated 
C) Neither 
D) Either a or b

Question 16

Which exchange rate measures the average relative strength of a given currency with respect to other currencies without eliminating the effect of change in price?

Accepted Answer

A) Nominal exchange rate 
B) Nominal effective exchange rate 
C) Real exchange rate 
D) Real effective exchange rate 
A) Nominal exchange rate 
B) Nominal effective exchange rate 
C) Real exchange rate 
D) Real effective exchange rate

Question 17

If in an effort to control depreciation of rupee the RBI puts more dollars in the supply, it may lead to greater inflation, caused by

Accepted Answer

A) Increase in money supply in the economy 
B) Reduced availability of goods due to increased exports. 
C) Reduced availability of goods due to reduced imports 
D) All of the above. 
A) Increase in money supply in the economy 
B) Reduced availability of goods due to increased exports. 
C) Reduced availability of goods due to reduced imports 
D) All of the above.

Question 18

The rate which is determined by the government is known as:

Accepted Answer

A) flexible 
B) fixed 
C) floating exchange rate 
D) none of these 
A) flexible 
B) fixed 
C) floating exchange rate 
D) none of these

Question 19

The exchange rate at which demand for foreign currency becomes equal to its supply, is called

Accepted Answer

A) equal rate of exchange 
B) mint parity 
C) equilibrium exchange rate 
D) all of these 
A) equal rate of exchange 
B) mint parity 
C) equilibrium exchange rate 
D) all of these

Question 20

Paper currency was used for internal use and gold was used for international settlement under standard

Accepted Answer

A) IMF 
B) gold bullion 
C) fixed 
D) floating 
A) IMF 
B) gold bullion 
C) fixed 
D) floating

The statutory basis for administration of foreign exchange in India is

Foreign exchange transactions involve monetary transactions

Flexible Exchange Rate System is also known as:

If rupee is getting depreciated fast and is considered undesirable by the government, the RBI may be advised to

The larger fluctuations in portfolio value of foreign exchange of financial institutions leads to

When one country manipulates exchange rate against the interest of other country, is known as

Other things remaining the unchanged, when in a country the price of foreign currency rises, national income is:

Buyers and sellers of foreign exchange are

In a flexile exchange rate regime

A foreign currency account maintained by a bank abroad is its

A change from Rs. 140 = 2 £ to Rs. 60 = 1 £ indicates that Rs. is

In which of the following items raises the supply of foreign exchange ?

Other things remaining the same, when in a country the market price of foreign currency falls, national income is likely

Demand for foreign currency depends upon:

A change from Rs. 60 = 1 dollar to Rs 62 = dollars indicates that Rs has

Which exchange rate measures the average relative strength of a given currency with respect to other currencies without eliminating the effect of change in price?

If in an effort to control depreciation of rupee the RBI puts more dollars in the supply, it may lead to greater inflation, caused by

The rate which is determined by the government is known as:

The exchange rate at which demand for foreign currency becomes equal to its supply, is called

Paper currency was used for internal use and gold was used for international settlement under standard

Reserve Bank of India and Its Functions

RBI and Banking : Coins, Instruments, Functions

Money, Banking and Monetary Policy in India

Cooperative and Development Banks in India

Financial Institutions and Foreign Exchange Market in India

Exchange Rate and Currency Systems: Understanding Market Forces and Transaction Types

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Exam 6: Foreign Exchange and Exchange Rates

The statutory basis for administration of foreign exchange in India is

Foreign exchange transactions involve monetary transactions

Flexible Exchange Rate System is also known as:

If rupee is getting depreciated fast and is considered undesirable by the government, the RBI may be advised to

The larger fluctuations in portfolio value of foreign exchange of financial institutions leads to

When one country manipulates exchange rate against the interest of other country, is known as

Other things remaining the unchanged, when in a country the price of foreign currency rises, national income is:

Buyers and sellers of foreign exchange are

In a flexile exchange rate regime

A foreign currency account maintained by a bank abroad is its

A change from Rs. 140 = 2 £ to Rs. 60 = 1 £ indicates that Rs. is

In which of the following items raises the supply of foreign exchange ?

Other things remaining the same, when in a country the market price of foreign currency falls, national income is likely

Demand for foreign currency depends upon:

A change from Rs. 60 = 1 dollar to Rs 62 = dollars indicates that Rs has

Which exchange rate measures the average relative strength of a given currency with respect to other currencies without eliminating the effect of change in price?

If in an effort to control depreciation of rupee the RBI puts more dollars in the supply, it may lead to greater inflation, caused by

The rate which is determined by the government is known as:

The exchange rate at which demand for foreign currency becomes equal to its supply, is called

Paper currency was used for internal use and gold was used for international settlement under standard

Reserve Bank of India and Its Functions

RBI and Banking : Coins, Instruments, Functions

Money, Banking and Monetary Policy in India

Cooperative and Development Banks in India

Financial Institutions and Foreign Exchange Market in India

Exchange Rate and Currency Systems: Understanding Market Forces and Transaction Types

Filters