Flashcards on Indian Economy: Foreign Trade and Balance of Payments
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What is foreign trade in economics?
Foreign trade is the exchange of goods and services between countries.
What is the balance of payments?
The balance of payments is a statement that summarizes all economic transactions between a country and the rest of the world during a specific period, usually a year.
What is the importance of foreign trade in the Indian economy?
Foreign trade is important for the Indian economy as it helps in the exchange of goods, facilitates economic growth, and provides employment opportunities.
How does foreign trade affect the balance of payments?
Foreign trade can affect the balance of payments by influencing the inflow and outflow of foreign currency, which in turn impacts the country's reserves and exchange rates.
What are the components of India's foreign trade?
The components of India's foreign trade include exports, imports, and trade balance.
What is the role of exports in the Indian economy?
Exports play a crucial role in the Indian economy by earning foreign exchange, boosting economic growth, and creating employment opportunities.
What is the role of imports in the Indian economy?
Imports satisfy domestic demand for goods that are not available or produced in sufficient quantity in the country, and also facilitate technological advancements.
What is a trade deficit?
A trade deficit occurs when a country's imports exceed its exports, indicating that it is buying more from foreign countries than it is selling to them.
What is a trade surplus?
A trade surplus occurs when a country's exports exceed its imports, indicating that it is selling more to foreign countries than it is buying from them.
How does international trade impact the Indian economy?
International trade impacts the Indian economy by promoting economic growth, creating employment opportunities, and facilitating the exchange of goods and services with other countries.
What is the foreign exchange rate?
The foreign exchange rate is the rate at which one currency can be exchanged for another currency.
What is the trade balance?
The trade balance is the difference between the value of a country's exports and the value of its imports over a given period.
What is the current account of the balance of payments?
The current account of the balance of payments records a country's trade in goods and services, income from investments, and current transfers.
What is the capital account of the balance of payments?
The capital account of the balance of payments records a country's capital transactions, including the purchase and sale of assets.
What is the financial account of the balance of payments?
The financial account of the balance of payments records a country's transactions in financial assets and liabilities, including direct investment, portfolio investment, and loans.