Page 220 - DECO201_MACRO_ECONOMICS_ENGLISH

Unit 12: Balance of Payments

4. Discuss the advantages and disadvantages of both a fixed exchange rate and floating Notes
exchange rate system.
5. Support the statement: “It is best to offset a capital account surplus with a current account
deficit”.
6. Which is preferable: a fixed or a flexible exchange rate policy?
7. Compare India’s BOP scenario in 2000’s with that of the 1950s and 1960s.

8. ‘India’s BOP has always been far from desirable’. Comment.
9. Highlight the main points of India’s BOP in 2009-2010.
10. ‘Technological changes are a major cause of disequilibrium in the balance of payments.’
Do you agree? Give suitable arguments to justify your answer.
Answers: Self Assessment

1. (d) 2. (a)
3. (a) 4. (c)
5. (b) 6. 0
7. Devaluation 8. Exchange control

9. Gold exchange standard 10. Increase
11. False 12. True
13. True 14. disequilibrium

15. flexible 16. fixed
12.8 Further Readings

Books Chris Mulhearn, Howard. R. Vane and James Eden, Economics for Business, Palgrave
Foundation, 2008
Dr. Atmanand, Managerial Economics, Excel Books, Delhi.

Lipsey & Chrystal, Economics- Indian Edition, Oxford University Press, 2007

Online links http://tutor2u.net/economics/revision-notes/a2-macro-balance-of-payments-
deficits.html
http://www.economicshelp.org/Macro Economics/bop/probs-balance-
payments-deficit.html

http://www.indiaonestop.com/economy/balanceofpayments/economy-macro-
balance%20of%20payments.htm
http://economics.about.com/od/balanceofpayments/Balance_of_Payments.htm

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