Which of the following statements are correct about the exports by a country?a)Export is a source of foreign currencyb)Export eases import expenditurec)Export increases central bank reserves of foreign currencyd)All of the aboveCorrect answer is option 'D'. Can you explain this answer?

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Which of the following statements are correct about the exports by a country?

a)
Export is a source of foreign currency
b)
Export eases import expenditure
c)
Export increases central bank reserves of foreign currency
d)
All of the above

Correct answer is option 'D'. Can you explain this answer?

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Which of the following statements are correct about the exports by a c...

Trade balance, i.e. the difference between export and import, is clearly the first variable influenced by export dynamics. Export is a source of foreign currency, easing import expenditure and increasing central bank reserves of foreign currency. If for exporting a country needs raw materials and semi-manufacturer goods from abroad, then export growth will increase imports as well. Provided export does not simply replace production previously directed to domestic demand, the increase of export will increase production, GDP, employment. Through Keynesian multiplier, this will engender a higher consumption and higher production again, giving rise to a positive feedback loop. Probably, imports will rise as a consequence. On the supply side, firms may compensate slower domestic dynamics with export, stabilizing their production and eventually profitability. Growing exports usually mean a firm strategy of market diversification.

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Which of the following statements are correct about the exports by a country?a)Export is a source of foreign currencyb)Export eases import expenditurec)Export increases central bank reserves of foreign currencyd)All of the aboveCorrect answer is option 'D'. Can you explain this answer?

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