In the above example, if exports change to X = 100, find the change in equilibrium income and the net export balance.

Indian investors lend abroad. Answer the following questions:

1. In which sub-account and on which side of Balance of Payments Account such lending is recorded? Give reasons.
2. Explain the impact of this lending on market exchange rate.

Explain the distinction between autonomous and accommodating' transactions in balance of payments. Also explain the concept of balance of payments 'deficit' in this context.

Why is the open economy autonomous expenditure multiplier smaller than the closed economy one?

The following figures are based on BoP accounts:

S.No.		(₹ in crores)
1.	Import of goods.	800
2.	Export of goods.	550
3.	Import of services (Banking, Shipping, Insurance, Tourism, etc.)	50
4.	Export of services (Banking, Shipping, Insurance, Tourism, etc.)	150
5.	Unilateral transfers from rest of the world (Gifts, Aids, etc.)	100
6.	Unilateral transfers to rest of the world (Gifts, Aids, etc.)	80
7.	Capital receipts (Loan from foreigners, Sale of assets to foreigners, Receipt of capital from foreigners).	200
8.	Capital Payments (Loans to foreigners, Buying of assets from foreigners, Payment of capital to foreigners).	70

Calculate: 

1. Balance of Trade.
2. Balance of Payments on Current Account.
3. Balance Payments on Capital Account.
4. Balance of Payments.

Define fixed exchange rate. How is the exchange rate determined in a flexible exchange rate system?

How is foreign exchange rate determined in the market?

Why does the demand for foreign currency fall and supply rises when its price rises? Explain.