Cash Flow Analysis

To solve the problem, we need to understand the effects of currency devaluation on a country's exports and imports.

1. Understanding the Concepts:

- Currency Devaluation: Reduction in the value of a country's currency relative to other currencies.
- Impact on Exports: Devaluation makes a country's goods cheaper and more competitive in the global market.
- Impact on Imports: Imports become more expensive because more local currency is needed to buy foreign goods.

2. Analyzing the Options:

- Option A: Exports become more expensive, and imports become cheaper — incorrect.
- Option B: Exports become cheaper, and imports become more expensive — correct.
- Option C: Both exports and imports become cheaper — incorrect.
- Option D: Both exports and imports become more expensive — incorrect.

Final Answer:

The primary impact is option B: Exports become cheaper, and imports become more expensive.

To solve the problem, we need to calculate the effective trade balance by considering the export bonus and the import value.

1. Understanding the Concepts:

- Exports: Value of goods sold to other countries.
- Imports: Value of goods bought from other countries.
- Trade Balance: Difference between exports and imports.
- Bonus on Exports: Additional amount received as a percentage of export value.

2. Given Values:

Exports = 800 crore
Imports = 950 crore
Bonus on exports = 10% of export value

3. Calculating the Effective Trade Balance:

Bonus amount = crore
Effective exports = crore
Trade balance = Effective exports - Imports = crore

Final Answer:

The effective trade balance of the country after accounting for the bonus is -70 crore, indicating a trade deficit of 70 crore.

To solve the problem, we need to understand the primary reasons why a country imposes tariffs on imported goods.

1. Understanding the Concepts:

- Tariffs: Taxes imposed on imported goods to increase their cost.
- Purpose of Tariffs: Usually imposed to protect domestic industries by making imported goods more expensive and less competitive.
- Effect of Tariffs: Helps domestic producers compete with foreign producers, and can also generate revenue for the government.

2. Analyzing the Options:

- Option A: Increasing imports and promoting free trade is contrary to imposing tariffs.
- Option B: Protecting domestic industries from foreign competition is a primary reason for tariffs.
- Option C: Reducing export revenue is not related to tariffs on imports.
- Option D: Eliminating trade deficit completely is not always possible or the main reason for tariffs.

Final Answer:

The best explanation is option B: To protect domestic industries from foreign competition.