UPSC Previous Year Question | Prelims GS | 2016

Which of the following best describes the term 'import cover', sometimes seen in the news?

  1. It is the ratio of value of imports to the Gross Domestic Product of a country
  2. It is the total value of imports of a country in a year
  3. It is the ratio between the value of exports and that of imports between two countries
  4. It is the number of months of imports that could be paid for by a country's international reserves

Answer

Correct Answer

It is the number of months of imports that could be paid for by a country's international reserves

Explanation

Import cover refers to the number of months of a country's imports that its foreign exchange reserves can finance.

Topics: external sector, foreign exchange reserves, import cover, indian economy