Question

Q. In reference to global economic relations, the term “beggar thy neighbour policy” refers to?

• A. Chronic dependence on aid from developmental organizations.
• B. Affecting the free trade by a weak currency
• C. Dependence on few countries for supply of key commodities
• D. None of the above

Answer 1

The correct option is B Affecting the free trade by a weak currency

Explanation:

• Beggar thy neighbor policy refers to a policy that aims at addressing one's own domestic problems at the expense of others — trading partners in particular, largely through competitive devaluation of their currencies by the central bank.
• This is also achieved by the imposition of various trade barriers (both tariff and non-tariff) to drive consumption of domestic goods up, as opposed to the consumption of imports.
• A devaluation would help gain a price advantage in exports without any improvements in the production efficiencies or regulatory improvements. This is often seen in the monetary policies followed by China.