| Direction: Q. 1 to 5 |
| Read the following case study and answer questions. |
| National income and balance of payments are two important macroeconomic variables. In an open economic model, national income is sum total of expenditures of all the sectors of an economy. GDP is probably the most widely reported and closely monitored aggregate statistic. |
| GDP is a measure of the size of an economy. It tells us the total amount of 'stuff the economy produces. Any change in the demand for domestic goods leads to change in national income of the country. Also, changes in foreign exchange rate affects trading relation between countries. |
A) Improve
B) Deteriorate
C) No change
D) Can't be predicted
Correct Answer: D
Solution :
Balance of trade is the difference between value of export of goods and import of goods only. As it is not clear from given case study that whether export of goods is increasing or decreasing, thus, the actual impact can't be predicted.
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