Distinguish between autonomous and accommodating transactions of balance of payments account.

Recently Government of India has doubled the import duty on gold. What impact is it likely to have on foreign exchange rate and how?

Name the broad categories of transactions recorded in the 'Capital account' of the Balance of Payments Accounts.

What are fixed and flexible exchange rates?

Classify whether the following trans actions will be recorded in current account or capital account.

1. Purchase of shares of Tata by Microsoft.
2. Imports of computer spare parts from America.
3. Borrowings from World Bank.
4. Repayment of loan by Indian Government taken from Japan.
5. Gifts received from a relative in Australia.
6. Purchase of Land in China.
7. Import of machinery.

Discuss briefly the meanings of:

1. Fixed Exchange rate.
2. Flexible Exchange Rate.

Explain the concept of surplus in the balance of payments account.

Distinguish between balance of trade and balance on current account.

Distinguish between the nominal exchange rate and the real exchange rate. If you were to decide whether to buy domestic goods or foreign goods, which rate would be more relevant? Explain.

When exchange rate of foreign currency rises, its supply rises. How? Explain.