Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

Sheetal's friend Ranjana came from USA, and was showing her new clothes which she brought in America. Now, after few days Sheetal went to her nearby market looking for the exact apparel but couldn't find the same. So, she insisted one of the shopkeeper to get it from USA. Now, according to you, how will this transaction impact the BoP account?

Options:

There would be a deficit in BoP account

There would be a surplus in BoP account

It will not effect the BoP account

None of the above

Correct Answer:

There would be a deficit in BoP account

Explanation:

As, Sheetal has insisted the shopkeeper to import the apparel from America, it will result in increase in imports and a negative shift in the balance of payment position. Due wo which deficit BoP may take place.