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 ______ . 
(Choose the correct alternative to fill in the blank)

• A. 1700
• B. 750
• C. 700
• D. 900

Hint:

In a favourable Balance of Trade, Exports exceed Imports. Use the BOT formula: \( {Exports} - {Imports} = BOT \).

Answer 1

The Correct Option is C

The formula for Balance of Trade (BOT) is: \[ {BOT} = {Exports} - {Imports} \] Given: \[ {BOT} = Rs. 500 \, {crore}, \, {Exports} = Rs. 1200 \, {crore} \] \[ {Imports} = {Exports} - {BOT} = 1200 - 500 = Rs. 700 \, {crore} \]