UPSC Exam > UPSC Questions > Consider the following statements. Import cov...
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Consider the following statements.
- Import cover is the number of months of imports that could be paid for by a country’s Forex reserves.
- Import substitution is an inward-looking trade strategy aimed at replacing imports with domestic production.
Which of the above statements is/are incorrect?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'D'. Can you explain this answer?
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Consider the following statements. Import cover is the number of month...
- Import cover is the number of months of imports that could be covered for by a country’s international reserves. Import cover is an important indicator of the stability of a currency.
- ‘Import Substitution’ (IS) generally refers to policy that eliminates the importation of the commodity and allows for the production in the domestic market. The objective of this policy is to bring about structural changes in the economy.
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Consider the following statements. Import cover is the number of month...
With its foreign exchange reserves. It is an indicator of a country's ability to finance its imports and manage its external debt. A higher import cover ratio indicates a stronger position, while a lower ratio indicates a weaker position.
The import cover ratio is calculated by dividing a country's foreign exchange reserves by its average monthly imports. For example, if a country has $100 billion in foreign exchange reserves and its average monthly imports are $10 billion, the import cover ratio would be 10 months.
The import cover ratio is an important metric for assessing a country's economic stability and vulnerability to external shocks. A higher ratio indicates that a country has a larger buffer to withstand disruptions in its external trade, such as a sudden increase in import prices or a decline in export earnings. It also suggests that the country is better equipped to manage its external debt obligations.
On the other hand, a lower import cover ratio implies that a country has a smaller cushion to absorb external shocks. It could indicate a higher risk of defaulting on its external debt or difficulties in financing its imports. A low import cover ratio may also signal a lack of foreign exchange reserves, which can limit a country's ability to stabilize its currency or intervene in the foreign exchange market to manage its trade balance.
Governments and policymakers monitor the import cover ratio as part of their efforts to maintain economic stability. They may take measures to increase foreign exchange reserves, such as promoting exports, attracting foreign direct investment, or implementing import restrictions. Additionally, countries with low import cover ratios may seek assistance from international organizations or negotiate loans to improve their external position.
In conclusion, the import cover ratio is an important indicator of a country's ability to finance its imports and manage its external debt. It provides insights into a country's economic stability and vulnerability to external shocks. Governments and policymakers closely monitor this ratio and take measures to maintain or improve it.
The import cover ratio is calculated by dividing a country's foreign exchange reserves by its average monthly imports. For example, if a country has $100 billion in foreign exchange reserves and its average monthly imports are $10 billion, the import cover ratio would be 10 months.
The import cover ratio is an important metric for assessing a country's economic stability and vulnerability to external shocks. A higher ratio indicates that a country has a larger buffer to withstand disruptions in its external trade, such as a sudden increase in import prices or a decline in export earnings. It also suggests that the country is better equipped to manage its external debt obligations.
On the other hand, a lower import cover ratio implies that a country has a smaller cushion to absorb external shocks. It could indicate a higher risk of defaulting on its external debt or difficulties in financing its imports. A low import cover ratio may also signal a lack of foreign exchange reserves, which can limit a country's ability to stabilize its currency or intervene in the foreign exchange market to manage its trade balance.
Governments and policymakers monitor the import cover ratio as part of their efforts to maintain economic stability. They may take measures to increase foreign exchange reserves, such as promoting exports, attracting foreign direct investment, or implementing import restrictions. Additionally, countries with low import cover ratios may seek assistance from international organizations or negotiate loans to improve their external position.
In conclusion, the import cover ratio is an important indicator of a country's ability to finance its imports and manage its external debt. It provides insights into a country's economic stability and vulnerability to external shocks. Governments and policymakers closely monitor this ratio and take measures to maintain or improve it.
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Consider the following statements. Import cover is the number of months of imports that could be paid for by a country’s Forex reserves. Import substitution is an inward-looking trade strategy aimed at replacing imports with domestic production.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer?
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Consider the following statements. Import cover is the number of months of imports that could be paid for by a country’s Forex reserves. Import substitution is an inward-looking trade strategy aimed at replacing imports with domestic production.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements. Import cover is the number of months of imports that could be paid for by a country’s Forex reserves. Import substitution is an inward-looking trade strategy aimed at replacing imports with domestic production.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements. Import cover is the number of months of imports that could be paid for by a country’s Forex reserves. Import substitution is an inward-looking trade strategy aimed at replacing imports with domestic production.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer?.
Consider the following statements. Import cover is the number of months of imports that could be paid for by a country’s Forex reserves. Import substitution is an inward-looking trade strategy aimed at replacing imports with domestic production.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements. Import cover is the number of months of imports that could be paid for by a country’s Forex reserves. Import substitution is an inward-looking trade strategy aimed at replacing imports with domestic production.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements. Import cover is the number of months of imports that could be paid for by a country’s Forex reserves. Import substitution is an inward-looking trade strategy aimed at replacing imports with domestic production.Which of the above statements is/are incorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer?.
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