ECONOMICS
BALANCE OF PAYMENTS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
True
|
|
|
False
|
|
|
Either A or B
|
|
|
None of the above
|
Detailed explanation-1: -(f) In order to restore the value of depreciating domestic currency, central bank buys the US dollars in the international money market.
Detailed explanation-2: -It raises the price of imported goods and services and triggers inflation. This will push the central bank to raise interest rates, which will likely hurt asset markets and economic growth. This could also lead to additional losses in the currency.
Detailed explanation-3: -Depreciation of the currency implies that more rupees are required to buy a dollar, or that a dollar can now buy goods worth more rupees than before. Accordingly. exports are expected to increase, while imports will take a hit.
Detailed explanation-4: -Sell foreign exchange assets, purchase own currency. Raise interest rates (attract hot money flows. Reduce inflation (make exports more competitive. Supply-side policies to increase long-term competitiveness. 03-Mar-2019