Question

49. which of the following is not a non monetary measure to correct the
Disequilibrium in BOP?
(a) Tariff
(b) Import quotas
fet Export promotion
(d) Devaluation​

Answer 1

Answer:

(d) Devaluation.......

Answer 2

Option d is the correct answer.

Devaluation  is not a non monetary measure to correct the

Disequilibrium in BOP.

1. It is a monetary measure because:
2. It implies a reduction in foreign exchange rate of an economy i.e. the value of a country's currency is reduced w.r.t other foreign currencies.
3. This leads to fall in price of exports and increase in price of imports.
4. The foreign currencies are kept with central bank. It is the involvement of central bank which will purchase or sell the foreign currency at lower rates.
5. Whereas, tariff, import quotas and export promotion are trade policy measures to correct BOP.