Vidaara.orgClass 12 · Mathematics
CodeVID-M12-WS
Open Economy Macroeconomics — Practice Worksheet
Name: ____________________
Roll No.: __________
Date: ____________
General Instructions
- All questions are compulsory.
- Choose the correct option (A, B, C or D) for each question.
- The answer key is at the end — try the paper first!
Section A — Multiple Choice (1 mark each)
15 × 1 = 15 marks
1.
An economy that trades with other countries is a/an:
- A.Closed economy
- B.Open economy
- C.Barter economy
- D.Planned economy
2.
A record of all economic transactions between a country and the rest of the world is the:
- A.Budget
- B.Balance of payments
- C.GDP
- D.Money supply
3.
The two main accounts of the BoP are the current account and the:
- A.Capital account
- B.Savings account
- C.Revenue account
- D.Tax account
4.
Export and import of goods (visibles) are part of the:
- A.Capital account
- B.Current account
- C.Revenue budget
- D.Money market
5.
Foreign investment and loans are recorded in the:
- A.Current account
- B.Capital account
- C.Balance of trade
- D.Revenue account
6.
The balance of just the goods part of the current account is the:
- A.Balance of trade
- B.Capital account
- C.Fiscal deficit
- D.Money supply
7.
The market where currencies are bought and sold is the:
- A.Stock market
- B.Foreign exchange market
- C.Money market
- D.Bond market
8.
The exchange rate is the:
- A.Price of one currency in terms of another
- B.Total exports
- C.A tax on imports
- D.The money supply
9.
The demand for foreign exchange comes mainly from:
- A.Importers and those sending money abroad
- B.Exporters
- C.Foreign tourists
- D.Remittances
10.
The supply of foreign exchange comes mainly from:
- A.Exporters and foreign money coming in
- B.Importers
- C.Students going abroad
- D.Tourists going out
11.
An exchange rate fixed and held by the central bank is a:
- A.Flexible rate
- B.Fixed exchange rate
- C.Floating rate
- D.Market rate
12.
A market-determined exchange rate that changes freely is:
- A.Fixed
- B.Flexible (floating)
- C.Devalued
- D.Pegged
13.
The system India follows, combining a float with central-bank intervention, is:
- A.Fixed
- B.Managed floating
- C.Pure flexible
- D.Gold standard
14.
A market fall in the value of a currency (flexible system) is:
- A.Appreciation
- B.Depreciation
- C.Revaluation
- D.Devaluation
15.
When the rupee depreciates, imports become:
- A.Costlier
- B.Cheaper
- C.Free
- D.Unchanged
Section B — Challenge / Olympiad (2 marks each)
10 × 2 = 20 marks
16.
Money sent home by Indians working in the Gulf (remittances) appears in India's BoP as:
- A.A supply of foreign exchange (current-account invisible)
- B.A demand for foreign exchange
- C.Capital-account borrowing
- D.An import of goods
17.
If the demand for dollars rises (more imports) while supply is unchanged, the rupee will:
- A.Depreciate (₹/$ rises)
- B.Appreciate
- C.Stay fixed
- D.Disappear
18.
A weaker rupee helps Indian exporters because their goods become:
- A.Cheaper for foreign buyers
- B.More expensive abroad
- C.Banned
- D.Tax-free
19.
Under a managed float, the RBI sells dollars when the rupee falls too fast in order to:
- A.Increase the supply of dollars and support the rupee
- B.Reduce dollar supply
- C.Devalue officially
- D.Fix the rate forever
20.
Devaluation differs from depreciation mainly in that devaluation is:
- A.A deliberate official act under a fixed-rate system
- B.A market outcome
- C.Always automatic
- D.An appreciation
21.
A persistent current-account deficit means a country's payments for imports and other current items exceed its:
- A.Receipts from exports and other current inflows
- B.Capital inflows only
- C.Tax revenue
- D.Money supply
22.
A fixed exchange rate gives stability but requires the central bank to hold large:
- A.Foreign exchange reserves to defend the rate
- B.Tax files
- C.Gold coins for citizens
- D.Domestic loans
23.
Foreign investment buying Indian company shares is recorded in the ____ and supplies foreign exchange.
- A.Capital account
- B.Current account
- C.Revenue budget
- D.Balance of trade
24.
A rising rupee (appreciation) tends to make a foreign holiday for an Indian tourist:
- A.Cheaper
- B.Costlier
- C.Free
- D.Impossible
25.
Exchange rates are important in macroeconomics because they link the domestic economy to the:
- A.Rest of the world (trade and capital flows)
- B.Local market only
- C.Government budget alone
- D.Stock exchange only
Answer Key
Section A — Multiple Choice (1 mark each)
- (B) Open economy
- (B) Balance of payments
- (A) Capital account
- (B) Current account
- (B) Capital account
- (A) Balance of trade
- (B) Foreign exchange market
- (A) Price of one currency in terms of another
- (A) Importers and those sending money abroad
- (A) Exporters and foreign money coming in
- (B) Fixed exchange rate
- (B) Flexible (floating)
- (B) Managed floating
- (B) Depreciation
- (A) Costlier
Section B — Challenge / Olympiad (2 marks each)
- (A) A supply of foreign exchange (current-account invisible)
- (A) Depreciate (₹/$ rises)
- (A) Cheaper for foreign buyers
- (A) Increase the supply of dollars and support the rupee
- (A) A deliberate official act under a fixed-rate system
- (A) Receipts from exports and other current inflows
- (A) Foreign exchange reserves to defend the rate
- (A) Capital account
- (A) Cheaper
- (A) Rest of the world (trade and capital flows)
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