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Balance of payment deficit can be removed through:
- a)Devaluation of currency
- b)Vigorous export promotion
- c)Import substitution
- d)All of the above
Correct answer is option 'D'. Can you explain this answer?
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Balance of payment deficit can be removed through:a)Devaluation of cur...
Explanation:
Balance of payment deficit refers to a situation where a country's imports exceed its exports. To remove this deficit, the following measures can be taken:
- Devaluation of currency: This refers to a deliberate decrease in the value of a country's currency. This makes exports cheaper and imports more expensive, thereby encouraging export and discouraging import. This can lead to an increase in export revenue and a decrease in import expenditure, which can help to reduce the balance of payment deficit.
- Vigorous export promotion: This involves increasing the production and export of goods and services. The government can provide incentives and subsidies to exporters, improve infrastructure and technology, and promote the development of new export markets. This can help to increase export revenue and reduce the balance of payment deficit.
- Import substitution: This involves producing goods and services domestically that were previously imported. This can help to reduce import expenditure and promote domestic production, thereby reducing the balance of payment deficit.
- All of the above: A combination of these measures can be used to effectively reduce the balance of payment deficit. Devaluation of currency can be used to make exports more competitive, while export promotion and import substitution can be used to increase export revenue and reduce import expenditure.
Therefore, the correct answer is option 'D'.
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Balance of payment deficit can be removed through:a)Devaluation of currencyb)Vigorous export promotionc)Import substitutiond)All of the aboveCorrect answer is option 'D'. Can you explain this answer?
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