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Open Economy Macroeconomics
Question
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What are (i) Spot, and (ii) Forward markets in foreign exchange?

Answer

(i) If the operation is of daily nature, it is called spot market or current market and the exchange rate that prevails in the spot market is called Spot Rate.
(ii) A market for foreign exchange for future delivery is known as forward market. Here foreign exchange is bought and sold for delivery at a future date.

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Some More Questions From Open Economy Macroeconomics Chapter

What is meant by Balance of Payments Account?

What are the features of Balance of Payment Account?

Describe components of Balance of Payment Account.

What is meant by visible and invisible items in BOP Account? Give two examples of invisible items.

What is balance of trade? 
or
Which two transactions determine BOT?
or
What is the difference between the values of exports and imports of goods called? 
or
When will BOT show a surplus? 
or
When is there deficit in BOT?
or
What is balance of visible items in BOP accounts called?

BOT shows a deficit of र 5,000 crores and value of imports are र 9,000 crores. What is the value of exports?

The value of a country’s import of goods is र 200 crores, and value of export is र 250 crores. Find out its BOT. 

A country’s balance of trade is र (–) 60 crores and value of import of goods is र 100 crores. out value of export of goods. 

What is meant by balance of payment (BOP) account?
or
What does BOP account record?
or
Where are borrowings from abroad recorded and why
 

Balance of payment always balances. Comment.