Ch-5 Open Economy Macro Economics : Macro-Economics

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Indian government

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12 Terms

1

Indian government

●Example- ________ borrows money from IMF, or any other country are included under credit item.

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2

V

(________) Speculators: Speculators sell foreign currency in the expectation of reducing losses in the future or gaining presently.

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3

Iv

(________) Unilateral transfers: Some economic flows between nations also take place without any payment.

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4

central bank

The ________ does have some power to manage the exchange rate slightly according to needs of the economy.

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5

●Balance

________ occurring on account of exports & imports of services is recorded as balance of invisible trade.

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6

Unilateral Transfers ● Unilateral transfers

________ refer to those receipts & payments which take place without any services in return.

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7

Direct Purchase

________ by Non- Residents: The supply of foreign exchange also comes from the nonresidents who make ________ in the domestic market.

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8

Domestic goods

________ become costlier for the foreign nationals leading to fall in export demand.

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9

positive relationship

There is a direct or ________ between exchange rate and supply of foreign exchange.

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10

exchange rate

It is a system that allows adjustments in ________ according to a set of rules and regulations which are officially declared in in foreign exchange market.

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11

●Any withdrawal

________ from foreign exchange reserves is recorded on the credit side of BOP as it leads to decrease in foreign exchange.

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12

Autonomous Receipts Autonomous Payments

● ________ (Surplus BOP) ● Autonomous Payments> Autonomous Receipts (Deficit in BOP) Accommodating Items in BOP ●Accommodating items or transactions refers to those transactions which are undertaken to cover the deficit or surplus in BOP.

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