MCQ
Foreign Trade and Balance of Payments MCQ - Practice Questions with Answers
Solve 91 Foreign Trade and Balance of Payments questions for RAS/RPSC preparation.
Practice questions
Q1With reference to Special Economic Zones (SEZs) in India, consider the following statements: 1. An SEZ is treated as a duty-free enclave outside India's customs territory for authorised operations. 2. An SEZ unit must achieve positive Net Foreign Exchange cumulatively over five years from commencement of production. 3. A licence is required for every import into an SEZ. 4. Routine customs examination of export/import cargo is a salient feature of SEZs. Which of the statements given above are correct?
Statements 1 and 2 are correct according to PIB's list of salient SEZ features. Statement 3 is incorrect because the same list says no licence is required for import. Statement 4 is incorrect because no routine customs examination of export/import cargo is a listed feature.
Q2Consider the following statements about Balance of Payments: 1. It summarises transactions between residents and non-residents during a period. 2. Under double-entry accounting, each transaction is recorded as only one entry. 3. It includes the goods and services account along with income-related accounts. Which of the statements given above are correct?
Statement 1 is correct: BoP records resident-non-resident transactions for a period. Statement 2 is incorrect: double-entry accounting records each transaction as two entries, not one. Statement 3 is correct: BoP includes the goods and services account and income-related accounts.
Q3With reference to e-commerce export infrastructure in FTP 2023, consider the following statements: 1. E-Commerce Export Hubs may provide storage, packaging, labelling, certification and testing facilities. 2. E-Commerce Export Hubs must be set up only by the Central Government. 3. Dak Ghar Niryat Kendras are intended to facilitate cross-border e-commerce through a hub-and-spoke model with Foreign Post Offices. 4. SCOMET and restricted goods can never be handled at E-Commerce Export Hubs under any condition. Which of the statements given above are correct?
Statements 1 and 3 are correct. Statement 2 is false because ECEHs are ordinarily set up through private initiative and may also be in PPP mode. Statement 4 is false because even SCOMET and restricted goods may be handled subject to compliance, except prohibited or otherwise disallowed goods.
Q4Match List I with List II and select the correct answer using the code given below:\nList I (Term)\nA. Current account deficit\nB. Goods account deficit (Oct-Dec 2025)\nC. Services surplus (Oct-Dec 2025)\nD. Current account deficit as percentage of GDP (Oct-Dec 2025)\nList II (Description / Figure)\n1. 1.3 per cent\n2. Excess of imports over exports in external transactions\n3. 57.5 billion US dollars\n4. 93.6 billion US dollars
The current account deficit is the excess of imports over exports in external transactions, so A matches 2. The goods account deficit in the October-December 2025 quarter was 93.6 billion US dollars, so B matches 4. The services surplus in the same quarter was 57.5 billion US dollars, so C matches 3. The current account deficit was 1.3 per cent of GDP, so D matches 1. Hence the correct code is A-2, B-4, C-3, D-1.
Q5With reference to item-wise import-export policy under FTP 2023, consider the following statements: 1. Item-wise import policy is given in ITC (HS) Schedule I. 2. Item-wise export policy is given in ITC (HS) Schedule II. 3. Whenever the Government brings a policy change for a particular item, the change is always retrospective. Which of the statements given above are correct?
Statements 1 and 2 are true: FTP 2023 places item-wise import and export policy in ITC (HS) Schedule I and Schedule II respectively. Statement 3 is false because policy changes are prospective from the notification date unless otherwise provided.
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6With reference to services in India's Balance of Payments, consider the following statements: 1. Services receipts and payments are compiled from authorised dealers and are supplemented by other sources. 2. Travel receipts record expenditure by Indian tourists abroad on the receipts side. 3. Transportation records receipts and payments linked to carriage of goods and natural persons. Which of the statements given above are correct?
7With reference to income and transfer entries in the Balance of Payments, consider the following statements: 1. Primary income includes returns for the temporary use of labour, financial resources and natural resources. 2. Secondary income records current transfers between residents and non-residents. 3. All remittances sent by workers abroad are recorded under merchandise trade in the goods account. 4. A current-account deficit may be interpreted as the economy's saving being lower than its investment. Which of the statements given above are correct?
8With reference to the financial account in Balance of Payments statistics, consider the following statements: 1. The financial account records the net acquisition and disposal of financial assets and liabilities. 2. Direct investment and portfolio investment are two functional categories of the financial account. 3. Reserve assets are excluded from the financial account and are shown only as a memorandum item outside the BoP. 4. Net errors and omissions are by definition the same as illegal capital flight. Which of the statements given above are correct?
9Consider the following statements: 1. Under FEMA, a current account transaction is a transaction other than a capital account transaction. 2. Payments due in connection with foreign trade are examples of current account transactions. 3. Persons resident in India require prior permission for every current account transaction, without exception. 4. Remittance out of lottery winnings is an example of a freely permitted current account transaction. Which of the statements given above are correct?
10With reference to invisibles in India's Balance of Payments, consider the following statements: 1. Invisibles are broadly classified into services, transfers and income. 2. Transfers are one-sided transactions without quid pro quo, such as grants, gifts and migrants' remittances. 3. Investment income payments exclude interest on non-resident deposits. Which of the statements given above are correct?
11Consider the following statements about authorised persons and current account convertibility: 1. Under FEMA, foreign exchange transactions are required to be routed only through entities licensed by RBI. 2. RBI may authorise a person to deal in foreign exchange as an authorised dealer, money changer or offshore banking unit. 3. FEMA removes the Government’s power to impose any restriction on current account transactions in public interest. Which of the statements given above are correct?
12With reference to Foreign Trade Policy 2023, consider the following statements: 1. It incorporates provisions relating to export and import of goods and services. 2. It came into force with effect from 1 April 2023. 3. It is scheduled to automatically lapse on 31 March 2028 under the quoted FTP provision. Which of the statements given above are correct?
13With reference to Balance of Payments concepts used by the Reserve Bank of India, consider the following statements: 1. The current account includes flows of goods, services, primary income and secondary income between residents and non-residents. 2. BoP is recorded as transactions between residents and non-residents during a period. 3. India's standard BoP presentation has separate capital and financial accounts exactly as in BPM6. 4. RBI has been compiling and publishing India's BoP data since 1948. Which of the statements given above are correct?
14Consider the following statements about merchanting trade and free exports under FTP 2023: 1. Merchanting trade can involve shipment of goods from one foreign country to another without touching Indian ports. 2. Merchanting trade involving an Indian intermediary is allowed subject to RBI guidelines, except for goods in the CITES and SCOMET lists. 3. Under FTP 2023, all goods are prohibited from export unless each shipment has prior DGFT authorisation. Which of the statements given above are correct?
15With reference to India's BoP compilation, consider the following statements: 1. Exports are valued on a CIF basis, while imports are valued on an FOB basis. 2. Customs data are the source for exports in BoP compilation. 3. As per international best practices, merchandise imports should also be presented on an FOB basis. Which of the statements given above are correct?