CA Foundation · Business Economics · International Trade
India's exports of goods are ₹9,000 crore and imports of goods are ₹12,500 crore. Net exports of services are +₹4,200 crore and net transfers (remittances) are +₹1,800 crore. Ignoring income flows, what is the current account balance?
The current account balance is a surplus of ₹2,500 crore. The trade deficit of ₹3,500 crore is more than offset by net services of ₹4,200 crore and net transfers of ₹1,800 crore, giving −3,500 + 4,200 + 1,800 = +2,500 crore.
- ADeficit of ₹3,500 crore
- BSurplus of ₹2,500 croreCorrect
- CDeficit of ₹500 crore
- DSurplus of ₹1,000 crore
Explanation
Trade balance = 9,000 − 12,500 = −3,500 crore. Add net services 4,200 and net transfers 1,800: −3,500 + 4,200 + 1,800 = +2,500 crore, a surplus. Choosing a deficit of 3,500 crore ignores services and transfers, which is the key error.
Did you get it right without looking?
One question tells you little. A timed set on International Trade shows your real accuracy, how long you take and where you lose marks.
More International Trade questions
- According to the theory of comparative advantage, a country should specialise in producing and exporting the good in which it has:
- Which of the following is an export promotion measure, rather than an import restriction, used as part of trade policy?
- India imposes a specific tariff of ₹150 per unit on imported electric fans. The world price is ₹1,000 per fan and India is a small importer.…
- The 'infant industry' argument for imposing a tariff suggests that:
- Which of the following is the main effect of an import quota on the price of the imported good in the importing country's domestic market?
- Which of the following best captures the 'infant industry' argument for protection?