Which of the following options does NOT indicate the measures to correct dis-equilibrium (deficit) in the balance of payment position?
Answer & explanation
Correct answer: option 4
The correct answer is Option 4: None of the above
Disequilibrium (deficit) means that imports are greater than the exports or inflow of foreign exchange is less than the outflow of foreign exchange.
To correct a deficit in the balance of payments, measures include all the given options:
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Promoting exports: This helps increase foreign exchange earnings, which can help reduce the deficit.
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Import substitution: Encouraging the production of goods domestically that were previously imported can reduce import expenditure, helping to address the deficit.
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Devaluation of domestic currency: This can make exports cheaper and imports more expensive, potentially improving the balance of payments.