Ramprasad Yadav has an import export business in Maharashtra. He imported goods worth 5 billion dollars. What will happen when we increase the imports of commodities in the country?
Answer & explanation
Correct answer: option 2
The correct answer is option 2: Outflow of foreign exchange
When a country increases its imports, it means that it is buying more goods and services from other countries. This requires the payment of foreign currency to these countries. This outflow of foreign currency can be a drain on a country's foreign exchange reserves, especially if exports do not keep pace.