36. Which of the following is an example of a current account transaction?
a. Exporting goods to a foreign country
b. Foreign portfolio investment
c. Repayment of external debt
d. Currency exchange for travel purposes
37. What is the capital account in the Balance of Payments?
a. It records international trade in goods and services.
b. It records international capital flows.
c. It records changes in foreign exchange reserves.
d. It records external debt obligations.
38. What is the difference between a trade deficit and a trade surplus?
a. A trade deficit occurs when imports exceed exports, while a trade surplus occurs when exports exceed imports.
b. A trade deficit occurs when exports exceed imports, while a trade surplus occurs when imports exceed exports.
c. A trade deficit occurs when a country borrows from foreign lenders, while a trade surplus occurs when a country lends to foreign borrowers.
d. A trade deficit occurs when a country experiences inflation, while a trade surplus occurs when a country experiences deflation.
39. Which of the following statements is true regarding the relationship between Forex Reserves and trade balance?
a. Higher Forex Reserves are always associated with a trade surplus.
b. Higher Forex Reserves are always associated with a trade deficit.
c. Forex Reserves and the trade balance are not directly related.
d. Forex Reserves only depend on capital flows and not on the trade balance.
40. What is the purpose of a Current Account Convertibility?
a. To allow unrestricted movement of goods and services in and out of a country
b. To facilitate currency exchange for international travel and tourism
c. To attract foreign direct investment
d. To regulate the inflow and outflow of capital in a country
