Foreign exchange reserves increase if:

Government increases taxes

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Exports increase while imports remain the same

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Imports increase while exports remain the same

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Both a and b

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Solution

The correct option is B
Exports increase while imports remain the same

If exports increase while imports are the same, reserves will rise as net exports is positive.

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In the event of depreciation of the country's currency, its exports tend to increase while imports tend to decrease.

If the imports of Company A in 1997 were increased by 40%, what would be the ratio of exports to the increased imports?

1991

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