GENERAL KNOWLEDGE

Detailed explanation-1: -The trade balance worsens by the value of total imports in foreign currency multiplied by the magnitude of the rise in the price of foreign currency since contracts made before the depreciation force fixed prices and volumes. The short-run period is commonly known as the “exchange rate pass-through period.”

Detailed explanation-2: -The most common barrier to trade is a tariff–a tax on imports. Tariffs raise the price of imported goods relative to domestic goods (good produced at home). Another common barrier to trade is a government subsidy to a particular domestic industry. Subsidies make those goods cheaper to produce than in foreign markets.