Foreign exchange is demanded by _______.

1. domestic residents to purchase goods and services from other countries.
2. sending gifts and grants to foreign countries (abroad).
3. the domestic residents to purchase financial assets in a particular country.
4. all of them.

Unilateral transfers are a part of:

1. Capital Account.
2. Current Account.
3. Balance of Trade Account.
4. Balance of Payment Account and Current Account.

Which is not a part of income receipts and payments from/to abroad in BoP account?

1. Profits.
2. Grants.
3. Interest.
4. Dividends.

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?

1. Nominal exchange rate.
2. Nominal effective exchange rate.
3. Real exchange rate.
4. Real effective exchange rate.

Increase in the value of domestic currency through market forces is called _______.

1. depreciation.
2. devaluation.
3. revaluation.
4. appreciation.

Which function of foreign exchange market protects against the foreign exchange risk?

1. Credit function.
2. Hedging function.
3. Transfer function.
4. All of them.

Foreign exchange transactions which are independent of other transactions in the Balance of Payments Account are called: (Choose the correct alternative)

1. Current transactions.
2. Capital transactions.
3. Autonomous transactions.
4. Accommodating transactions.

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

1. managed floating.
2. dirty floating.
3. wide band.
4. crawling peg.

Which items in Balance of Payments are also called 'above the line' items?

1. Autonomous items.
2. Accommodating items.
3. Visible items.
4. Invisible items.

Which is not a feature of Balance of Payments (BOP) Account?

1. It includes economic transactions.
2. It has given period of time.
3. It records only capital transactions.
4. Trade between resident of a country and rest of the world.