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Question : 19
Total: 47
State, giving valid reasons whether the following statements are true or false :
(i) Trade deficit is always a great cause of worry for an economy.
(ii) Depreciation of currency has same effect on exports as devaluation of currency.
(iii) 'Indians investing in assets abroad' will be recorded under debit side of capital account in Balance of Payments.
(i) Trade deficit is always a great cause of worry for an economy.
(ii) Depreciation of currency has same effect on exports as devaluation of currency.
(iii) 'Indians investing in assets abroad' will be recorded under debit side of capital account in Balance of Payments.
Solution:
(i) False, trade deficit is a lesser cause of worry if it reflects a rise in investment which will build the capital stock and increase the future output in an economy.
(ii) True, because devaluation of currency increase the value of export same like depreciation does.
(iii) True, because Indians lending abroad to creation of foreign exchange assets, its recorded on the Debit side of capital accounts (outflow).
(ii) True, because devaluation of currency increase the value of export same like depreciation does.
(iii) True, because Indians lending abroad to creation of foreign exchange assets, its recorded on the Debit side of capital accounts (outflow).
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