Ch-5 Open Economy Macro Economics : Macro-Economics

Indian government

Indian government

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

V

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

Iv

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

central bank

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

●Balance

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

Unilateral Transfers ● Unilateral transfers

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

Direct Purchase

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

Domestic goods

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

positive relationship

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

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.

●Any withdrawal

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

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.