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Home Questions 79G7MQJU4P
Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

The Reserve Bank sells foreign exchange when there is a deficit. This move of RBI is known by which of the following?

Options:

Official reserve sale.

Balance of payments deficit.

Balance of payments surplus.

Balance of trade.

Correct Answer:

Official reserve sale.

Explanation:

The correct answer is Option (1) → Official reserve sale.

When there is a deficit in the Balance of Payments (BOP), the Reserve Bank of India (RBI) intervenes by selling foreign exchange from its reserves to finance the deficit. This act is called an "official reserve sale."

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