Economy
2016
External Sector
Balance of Payments
Forex Reserves
Which of the following best describes the term ‘import cover’, sometimes seen in the news?
C.It is the ratio between the value of exports and that of imports between two countries
D.It is the number of months of imports that could be paid for by a country’s international reserves
A.It is the ratio of value of imports to the Gross Domestic Product of a country
B.It is the total value of imports of a country in a year
Correct Answer: Option D
Import Cover indicates the number of months a country can finance its imports using its foreign exchange reserves.
A higher import cover provides a buffer against Balance of Payments (BoP) crises, enabling proactive measures.
For example, India's import cover is approximately 12 months (as of the source article).
Therefore, option d is the correct definition of 'import cover'.
Sources:
More Economy Questions
Which one of the following is the main objective of the ‘Make in India’ initiative?Economy · 2015With reference to the Indian economy, "Collateral Borrowing and Lending Obligations" are the instrum...Economy · 2024In the context of any country, which one of the following would be considered as part of its social ...Economy · 2019Which one of the following is likely to be the most inflationary in its effects?Economy · 2021With reference to the Indian economy, consider the following statements:Economy · 2022