Practice Relationship Between BOP and Exchange Rates - 3 | Chapter 4: Balance of Payments and Exchange Rate | ICSE Class 12 Economics
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3 - Relationship Between BOP and Exchange Rates

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Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What does a current account deficit indicate?

💡 Hint: Think about what happens when a country buys more from other countries.

Question 2

Easy

What happens to a currency if a country has a surplus?

💡 Hint: Consider the relationship between money coming into the country and currency value.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What happens to a currency when there is a current account deficit?

  • It appreciates
  • It depreciates
  • It remains stable

💡 Hint: Consider how trade impacts currency value.

Question 2

A surplus in the balance of payments usually results in currency appreciation. True or False?

  • True
  • False

💡 Hint: Think about the flow of money and economic health.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A country has a consistent current account deficit of $10 billion. Discuss the potential long-term effects on its economy and propose a policy response.

💡 Hint: Consider both immediate economic effects and long-term consequences.

Question 2

Analyze a scenario where a country has a surplus of $5 billion in its current account for five consecutive years. What impact might this have on its long-term exchange rate and international relations?

💡 Hint: Look at historical examples where surpluses led to international tension.

Challenge and get performance evaluation