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External Sector- 2 Video Lecture | Indian Economy for UPSC CSE
FAQs on External Sector- 2 Video Lecture - Indian Economy for UPSC CSE
| 1. What is the external sector of an economy? |  |
Ans. The external sector of an economy refers to the part of the economy that interacts with the rest of the world through international trade, investments, and financial transactions. It includes the export and import of goods and services, foreign direct investment, remittances, and international borrowing and lending.
| 2. What are the main components of the external sector? | |
Ans. The main components of the external sector are exports, imports, and the balance of trade. Exports refer to the goods and services produced domestically and sold to other countries. Imports, on the other hand, are the goods and services that are purchased from other countries and brought into the domestic economy. The balance of trade is the difference between the value of exports and imports.
| 3. How does the external sector affect the overall economy? | |
Ans. The external sector plays a crucial role in the overall economy. It affects economic growth, employment, and the balance of payments. A strong external sector with higher exports can boost economic growth and create employment opportunities. Conversely, a weak external sector with higher imports can lead to trade deficits and put pressure on the balance of payments.
| 4. What are the factors that influence the external sector? | |
Ans. Several factors influence the external sector of an economy. These include exchange rates, global economic conditions, trade policies, competitiveness of domestic industries, and technological advancements. Exchange rates can affect the competitiveness of exports and imports. Global economic conditions, such as recessions or booms, can impact demand for goods and services. Trade policies and regulations also play a significant role in shaping the external sector.
| 5. What are the benefits of a strong external sector? | |
Ans. A strong external sector can bring several benefits to an economy. It can lead to increased economic growth, job creation, and higher income levels. It can also improve the balance of payments, strengthen the domestic currency, and attract foreign direct investment. Additionally, a strong external sector can enhance the competitiveness of domestic industries and promote innovation and technological advancements.
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