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Chapters
Chapter 1: Microeconomics and Macroeconomics: Introduction
2: Demand and Law of Demand
3: Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis
4: Elasticity of Demand
5: Supply - Law of Supply and Price Elasticity of Supply
6: Market Mechanism: Equilibrium Price and Quantity in a Competitive Market
7: Laws of Returns - Returns to a Factor and Returns to Scale
8: Cost and Revenue Analysis
9: Forms of Market
10: Producer's Equilibrium
11: Determination of Equilibrium Price and Output Under Perfect Competition
SECTION 2: THEORY OF INCOME AND EMPLOYMENT
12: Theory of Income and Employment
SECTION 3: MONEY AND BANKING
13: Money: Meaning and Functions
14: Banks: Commercial Bank and Central Bank
SECTION 4: BALANCE OF PAYMENTS AND EXCHANGE RATE
▶ 15: Balance of Payments and Exchange Rate
SECTION 5: PUBLIC FINANCE
16: Fiscal Policy
17: Government Budget
SECTION 6: NATIONAL INCOME
18: National Income and Circular Flow of Income
19: National Income Aggregates
20: Methods of Measuring National Income
SECTION 7: PROJECT WORK
21: Project Work
22: Model Short Answer Questions
![Frank solutions for Economics [English] Class 12 ISC chapter 15 - Balance of Payments and Exchange Rate - Shaalaa.com](/images/economics-english-class-12-isc_6:557367fb4d974c67badae9e1dbdc022d.jpg "Frank solutions for Economics [English] Class 12 ISC chapter 15 - Balance of Payments and Exchange Rate")
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Solutions for Chapter 15: Balance of Payments and Exchange Rate
Below listed, you can find solutions for Chapter 15 of CISCE Frank for Economics [English] Class 12 ISC.
Frank solutions for Economics [English] Class 12 ISC 15 Balance of Payments and Exchange Rate TEST YOURSELF QUESTIONS [Pages 294 - 298]
Select correct option for each of the following questions:
A systematic record of economic transactions between residents of a country and rest of the world is known as ______.
balance of trade
balance of payments
balance of current account
balance of capital account
The current account under the balance of payments of a country records ______.
export and import of goods
export and import of services
unilateral transfer
all of these
International financial transactions which take place because of normal economic considerations (motives life earnings of profits, dividends, etc.) are known as ______.
autonomous capital flows
accommodating capital flows
visible items of trade
unilateral transfers
International economic transaction which take place to bring the balance of payments into equilibrium are known as ______.
autonomous capital flows
accommodating capital flows
visible items of trade
unilateral transfers
Which of the following items will be recorded on the credit side of the balance of payments account of a country?
Imports of goods
Borrowings from abroad
Unilateral transfer payments made to foreigners
Purchase of assets abroad
Which of the following items will be recorded on the debit side of the balance of payments account of a country?
Loan from USA
Exports of services
Unilateral transfer payments made to foreigner
Sale of assets to foreigners
If the exchange rate changes from 1$ = ₹73 to 1\$ = ₹75, it implies that ______.
Indian rupee has depreciated
the rupee has appreciated
the dollar has depreciated
the rupee has revalued
If the rate of exchange of Indian currency vis-a-vis American dollar changes from 1\$ = ₹70 to 1$ = ₹70, we will say that ______.
the dollar has appreciated
the rupee has appreciated
the rupee has depreciated
the rupee has devalued
Under flexible exchange rate system, the rate of exchange between Indian rupee and US dollar is determined by ______.
The RBI
US Federal Bank
IMF
foreign exchange market
Very Short Answer Questions
What do you understand by balance of payments?
Name two accounts of balance of payments.
State the basic rule of recording transactions in a balance of payments account.
Give two examples of items to be recorded on the credit side of the balance of payments.
Give two examples of items to be recorded on the debit side of the balance of payments.
What are visible transactions? Give examples.
What are invisible transactions? Give examples.
Mention two invisible items in the balance of the payments of a country.
What are current account transactions?
Name the types of transactions recorded in the current account of the balance of payments.
What are unilateral transfers?
Unilateral transfers are part of invisible items?
What types of transactions are recorded in a capital account?
List two items of the capital account of the balance of payments.
Distinguish between balance of current account and balance of capital account.
What does SDR stand for?
Define balance of trade.
What is meant by balance of current account?
What is balance of capital account?
Distinguish between an autonomous transaction and accommodating transactions of the balance of payments account.
Distinguish between balance of current account and balance of capital account.
Give two differences between current account and capital account of balance of payments account.
Distinguish between Balance of payments and Balance of trade.
Distinguish between Balance of payments and Balance of trade.
When is a country's balance of payments said to be adverse (unfavourable)?
When is a country's balance of payments said to be favourable?
Explain any two causes of deficits in the balance of payments.
State two measures to correct disequilibrium in the balance of payments.
What is meant by exchange controls?
What is meant by foreign exchange?
Define foreign exchange market.
What is meant by exchange rate?
Name two ways of expressing the foreign exchange rate.
State the two exchange rate systems.
What is fixed exchange rate system?
What is a flexible (floating) exchange rate system?
What is the exchange rate system prevailing in most of the countries of the world at present? Define it.
Give one difference between flexible exchange rate and fixed exchange rate.
What is ‘devaluation’?
Differentiate between devaluation and depreciation.
Differentiate between revaluation of currency and appreciation of the currency.
How does depreciation (devaluation) affect the imports of a country?
How does depreciation (devaluation) affect the exports of a country?
In what ways appreciation (revaluation) affect the international trade of a country?
Does the central bank of a country intervene in the foreign exchange market to influence it?
How is the rate of exchange determined in a flexible exchange rate system?
Short Answer Questions
Discuss the various components of the current account of the balance of payments.
State any four items of the current account of the balance of payments account.
State any four items of capital account of the balance of payments account.
State the components of capital account of balance of payments.
Distinguish between balance of trade, balance of current account and balance of capital account.
Distinguish between balance of trade and balance of invisibles in the balance of payments.
“Balance of payments must always balance.” Comment.
Explain any three causes for disequilibrium in the balance of payments of a country.
Explain three export promotion measures.
How can the government correct an adverse balance of payments through export promotion?
How can the government correct an adverse balance of payments through import control?
Give one difference between flexible exchange rate and fixed exchange rate.
What is the extent of intervention by the central bank under a fixed exchange rate system?
What is the extent of intervention by the central bank under a flexible exchange rate system?
Differentiate between devaluation and depreciation.
How devaluation and depreciation affect the foreign trade of a country.
Differentiate between devaluation and depreciation.
How can depreciation of a currency be a measure of correcting disequilibrium of ‘balance of payments’?
How do changes in exchange rates influence domestic prices?
State the main sources of demand for foreign exchange.
State the main sources of supply of foreign exchange.
Explain the relationship between foreign exchange rate and demand for foreign exchange.
Explain the relationship between foreign exchange rate and supply of foreign exchange.
Long Answer Questions
What do you understand by balance of payments?
Bring out the components of balance of payments account.
State the items included in the balance of payments of a country.
State any four items of the current account of the balance of payments account.
State any four items of capital account of the balance of payments account.
Discuss the various components of the current account of the balance of payments.
Explain the concept of 'deficit' in the balance of payments.
Explain any four causes of an adverse balance of payments of a country.
State two measures to correct disequilibrium in the balance of payments.
State two measures to correct disequilibrium in the balance of payments.
Differentiate between devaluation and depreciation.
Differentiate between revaluation of currency and appreciation of the currency.
How is the exchange rate determined under a flexible exchange rate regime?
‘The flexible exchange rate system is a system of automatic adjustment in the balance of payments disequilibrium.’ Explain with the help of a diagram.
Read the passage below and answer the questions that follow.
| Economic crises in Sri Lanka in June and July 2020 arose from years of high fiscal deficits, translating into high current account deficits, empty foreign exchange reserves and hence soaring inflation and debt default. This holds lessons for India. At the present juncture (July, 2022) India has a high combined fiscal deficit of 11 percent for the center and the states. The current account deficit is likely to be 3 percent of GDP. Consumer inflation is 7 percent, and wholesale price inflation is 15 percent. We need to overcome this situation so as to avoid a likely economic crisis. |
- What is meant by foreign exchange? [1]
- What is balance of current account? [2]
- Define depreciation of rupee. [1]
- What is public debt. State two adverse effects? [2]
- Distinguish between demand-pull inflation and cost-push inflation. [2]
Thinking Beyond...
How do capital movements affect the exchange rates?
How does RBI intervenes to influence the exchange rate?
Solutions for 15: Balance of Payments and Exchange Rate
Frank solutions for Economics [English] Class 12 ISC chapter 15 - Balance of Payments and Exchange Rate
Shaalaa.com has the CISCE Mathematics Economics [English] Class 12 ISC CISCE solutions in a manner that help students grasp basic concepts better and faster. The detailed, step-by-step solutions will help you understand the concepts better and clarify any confusion. Frank solutions for Mathematics Economics [English] Class 12 ISC CISCE 15 (Balance of Payments and Exchange Rate) include all questions with answers and detailed explanations. This will clear students' doubts about questions and improve their application skills while preparing for board exams.
Further, we at Shaalaa.com provide such solutions so students can prepare for written exams. Frank textbook solutions can be a core help for self-study and provide excellent self-help guidance for students.
Concepts covered in Economics [English] Class 12 ISC chapter 15 Balance of Payments and Exchange Rate are Concept of Balance of Payments, Components of Balance of Payments, Current Account Transactions, Capital Account Transactions, Categories of Balance of Payments, Balance of Payments Disequilibrium, Measures to Correct Disequilibrium in the Balance of Payments, Foreign Exchange Rate, Concepts of Depreciation, Appreciation, Devaluation and Revaluation, Determination of Exchange Rate in a Free Market, Balance of Trade and Balance of Payments- Comparison, Methods to Measure Balance of Payments, Balance of Payments Always Balances, Exchange Rate, Types of Foreign Exchange Rate, Determination of Equilibrium Rate of Exchange, Structure of Balance of Payment, Features of Balance of Payment, Fixed Rate of Exchange, Factors or Determinants of Foreign Exchange Rate, Flexible Rate of Exchange, Managed Floating Exchange Rate System.
Using Frank Economics [English] Class 12 ISC solutions Balance of Payments and Exchange Rate exercise by students is an easy way to prepare for the exams, as they involve solutions arranged chapter-wise and also page-wise. The questions involved in Frank Solutions are essential questions that can be asked in the final exam. Maximum CISCE Economics [English] Class 12 ISC students prefer Frank Textbook Solutions to score more in exams.
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