Q22 of 25 Page 1

State the meaning of the following :

(i) Fixed Foreign Exchange Rate


(ii) Trade Surplus


(iii) Accommodating Transactions


(i) Fixed Foreign Exchange Rate-The fixed exchange rate is the exchange rate as fixed by the government of a country. It is the value of the domestic currency in terms of foreign currency. It remains constant unless the government revises it either upwards or downwards.


(ii) Trade Surplus- The trade surplus is a situation where the value of exports of visible goods is more than the value of the import of visible goods in the same year.


(iii) Accommodating Transactions-An accommodating transaction is a balance of payment transaction which is undertaken to cover the deficit or a surplus in an autonomous transaction.


More from this chapter

All 25 →
20

Distinguish between net factor income from abroad and net exports.

OR


What are ‘non-monetary exchanges’? Discuss with a suitable example.


 21

Explain the following functions of the Central Bank :

(i) Banker’s bank


(ii) Authority of currency issue


 23

The saving function of an economy is given as :

S = – 25 + 0.25 Y.


If the planned investment is < 200 crores, calculate the following :


(i) The equilibrium level of income in the economy.


(ii) Aggregate demand at income of < 500 crores.


 24

(a) What is meant by the problem of double counting? Discuss briefly the two approaches to avoid this problem.

(b) Define ‘Capital goods’.


OR


Given the following data, find the values of ‘Operating Surplus’ and ‘Net Exports’ :