ECONOMICS
ECONOMIC DEVELOPMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Decreases, Exports, Imports
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Increases, Exports, Imports
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Decreases, Imports, Exports
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Increases, Imports, Exports
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Detailed explanation-1: -A foreign currency gap exists when the country is not attracting sufficient capital flows to make up for a deficit in the capital account on the balance of payments. In other words, the value of the current account deficit is larger than the value of capital inflows.
Detailed explanation-2: -A foreign exchange gap happens when currency outflows persistently exceed currency inflows.
Detailed explanation-3: -If imports exceed exports, the country or area has a trade deficit and its trade balance is said to be negative.
Detailed explanation-4: -When price of a foreign currency rises domestic goods become relatively cheaper. It induces the foreign country to increase their imports from the domestic country. As a result supply of foreign currency rises.