External Sector

The external sector deals with:
a) Government expenditure
b) Rural development
c) Foreign trade, investment, and exchange
d) Domestic banking
✅ c) Foreign trade, investment, and exchange

Balance of Payments (BoP) includes:
a) Only exports
b) Only imports
c) All economic transactions with the world
d) Government subsidies
✅ c) All economic transactions with the world

India's Balance of Payments has two main components:
a) Trade and aid
b) Current account and capital account
c) Revenue and fiscal
d) Trade and savings
✅ b) Current account and capital account

A trade deficit occurs when:
a) Imports > Exports
b) Exports > Imports
c) Imports = Exports
d) Foreign exchange rises
✅ a) Imports > Exports

Which item is part of the current account?
a) FDI
b) FII
c) Imports and exports of goods and services
d) Foreign loans
✅ c) Imports and exports of goods and services

Foreign Direct Investment (FDI) is included in:
a) Revenue account
b) Current account
c) Capital account
d) Budget
✅ c) Capital account

India's major export items include:
a) Crude oil
b) Electronics
c) Petroleum products, gems, textiles
d) Coffee and rubber
✅ c) Petroleum products, gems, textiles

India's major import item is:
a) Gems
b) Wheat
c) Crude oil
d) Fertilizer
✅ c) Crude oil

What is the full form of FEMA?
a) Foreign Exchange Maintenance Act
b) Foreign Economic Management Act
c) Foreign Exchange Management Act
d) Fiscal Economic Monitoring Act
✅ c) Foreign Exchange Management Act

FEMA replaced which earlier act?
a) FRBM Act
b) FERA
c) PMLA
d) SEBI Act
✅ b) FERA

India's largest trading partner (FY24) is:
a) China
b) USA
c) UAE
d) Germany
✅ b) USA

Foreign exchange reserves of India are held by:
a) Ministry of Finance
b) SEBI
c) RBI
d) NITI Aayog
✅ c) RBI

Exchange rate refers to:
a) Currency notes issued by RBI
b) Gold valuation
c) Rate at which one currency is exchanged for another
d) Repo rate
✅ c) Rate at which one currency is exchanged for another

Appreciation of rupee means:
a) ₹ becomes stronger compared to USD
b) ₹ becomes weaker
c) Imports become costlier
d) RBI increases repo rate
✅ a) ₹ becomes stronger compared to USD

India’s foreign exchange reserves in 2024 stand at approximately:
a) $350 billion
b) $500 billion
c) $640 billion
d) $700 billion
✅ c) $640 billion

What is a current account surplus?
a) Exports < Imports
b) Exports > Imports
c) FDI > FPI
d) Foreign reserves fall
✅ b) Exports > Imports

Which sector earns the most foreign exchange for India?
a) Tourism
b) IT services
c) Iron and steel
d) Automobiles
✅ b) IT services

In which currency does India trade the most?
a) Pound
b) Euro
c) US Dollar
d) Chinese Yuan
✅ c) US Dollar

India’s foreign trade policy is issued by:
a) RBI
b) SEBI
c) Ministry of Commerce
d) Ministry of Finance
✅ c) Ministry of Commerce

In terms of BoP, “invisibles” refer to:
a) Hidden taxes
b) Illegal trade
c) Services, remittances, and software
d) Defence expenditure
✅ c) Services, remittances, and software

Which organization facilitates global trade?
a) IMF
b) WTO
c) World Bank
d) UNCTAD
✅ b) WTO

India joined the WTO in:
a) 1991
b) 1995
c) 2000
d) 1996
✅ b) 1995

Remittances to India mainly come from:
a) USA
b) UAE
c) Bangladesh
d) Nepal
✅ b) UAE

FPI stands for:
a) Foreign Portfolio Investment
b) Financial Public Income
c) Fiscal Policy Index
d) Foreign Production Index
✅ a) Foreign Portfolio Investment

Which among the following is a soft currency?
a) US Dollar
b) Euro
c) INR
d) Japanese Yen
✅ c) INR

Convertibility of rupee on current account was introduced in:
a) 1991
b) 1994
c) 1997
d) 2000
✅ b) 1994

India's main trade deficit country is:
a) China
b) UAE
c) USA
d) Japan
✅ a) China

Which Indian port handles maximum foreign trade?
a) Chennai
b) Mumbai
c) Kandla
d) Jawaharlal Nehru Port (JNPT)
✅ d) Jawaharlal Nehru Port (JNPT)

Trade policy aims to promote:
a) FDI
b) Domestic sales
c) Exports
d) All of the above
✅ c) Exports

The term "terms of trade" means:
a) Trade agreements
b) Ratio of export price to import price
c) WTO rules
d) Tariff schedules
✅ b) Ratio of export price to import price

Dumping means:
a) Import of goods without quality check
b) Exporting goods at very low prices
c) Exports without license
d) Tax-free imports
✅ b) Exporting goods at very low prices

India follows which exchange rate regime?
a) Fixed
b) Free float
c) Managed float
d) Gold standard
✅ c) Managed float

Which agency manages India's foreign debt?
a) RBI
b) Ministry of Finance
c) DEA
d) SBI
✅ c) Department of Economic Affairs (DEA)

India’s import of gold primarily affects:
a) Forex reserves
b) Services exports
c) Current account deficit
d) Capital account
✅ c) Current account deficit

Which of these is a barrier to trade?
a) GST
b) Subsidies
c) Tariffs and quotas
d) Repo rate
✅ c) Tariffs and quotas

Which product is India's top IT export?
a) Hardware
b) Software services
c) Mobile apps
d) Data cables
✅ b) Software services

Special Economic Zones (SEZs) were created to:
a) Boost agriculture
b) Promote local employment
c) Encourage exports
d) Increase taxes
✅ c) Encourage exports

The term BoT stands for:
a) Balance of Trade
b) Bank of Trade
c) Bill of Tax
d) Board of Transactions
✅ a) Balance of Trade

Devaluation of currency means:
a) Increasing currency value
b) Official lowering of currency value
c) RBI buys dollars
d) Reducing interest rate
✅ b) Official lowering of currency value

A positive BoP means:
a) India is exporting more than importing
b) Rupee is weakening
c) Trade deficit is rising
d) Forex reserves are declining
✅ a) India is exporting more than importing

Which organization publishes World Trade Outlook?
a) IMF
b) WTO
c) RBI
d) UNCTAD
✅ b) WTO

A strong rupee affects:
a) Imports positively
b) Exports positively
c) Both positively
d) Both negatively
✅ a) Imports positively

India’s external debt (2023–24) is approx.:
a) $450 billion
b) $620 billion
c) $575 billion
d) $510 billion
✅ b) $620 billion

Which of the following improves forex reserves?
a) Export growth
b) FDI inflow
c) Service remittances
d) All of the above
✅ d) All of the above

India's first Export Processing Zone was set up at:
a) Chennai
b) Mumbai
c) Kandla
d) Kolkata
✅ c) Kandla

The Directorate General of Foreign Trade (DGFT) comes under:
a) RBI
b) Ministry of Commerce
c) Ministry of External Affairs
d) NITI Aayog
✅ b) Ministry of Commerce

Which country is the largest source of FDI to India?
a) USA
b) Mauritius
c) China
d) UK
✅ b) Mauritius

SDRs are maintained by:
a) RBI
b) IMF
c) World Bank
d) WTO
✅ b) IMF

Full convertibility of rupee exists on:
a) Capital account only
b) Current account only
c) Neither
d) Both
✅ b) Current account only

India's forex reserves do NOT include:
a) Gold
b) Foreign securities
c) SDRs
d) Black money
✅ d) Black money