Question

Suppose, the Balance of Trade of an imaginary economy shows a favourable balance of Rs. 500 crore. The values of merchandise exports are Rs. 1200 crore and transfer payments are Rs. 400 crore. The value of merchandise imports would be Rs. ------ crore. (Choose the correct alternative to fill in the blank)

• A. 1700
• B. 750
• C. 700
• D. 900

Hint:

A favourable Balance of Trade occurs when the value of exports exceeds the value of imports.

Answer 1

The Correct Option is C

Step 1: Understanding the Balance of Trade formula. \[ {Balance of Trade} = {Exports} - {Imports} \] Given: \[ 500 = 1200 - {Imports} \] Step 2: Solving for Imports. \[ {Imports} = 1200 - 500 = 700 \] Step 3: Conclusion. Thus, the correct answer is \( \mathbf{(C)} \).