Question
Increase in India's trade deficit may lead to which of the following:
Answer: Option A
Answer: (a)When trade deficit increases that means imports are increasing in the country as compared to exports. Increase in imports causes an increase in demand for dollars which results in decline in value of Indian currency. Increase in trade deficit results in money going out of the Indian economy.
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Answer: (a)When trade deficit increases that means imports are increasing in the country as compared to exports. Increase in imports causes an increase in demand for dollars which results in decline in value of Indian currency. Increase in trade deficit results in money going out of the Indian economy.
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