Pls answer b)
Dear Student
a) Indian investor lend abroad recorded on the debit side in capital Account. Capital account of Bop records all those transactions between the residents of Country and rest of world which cause a change in assets or Liabilities of residents of country or its government. Lending to abroad by indian leads to creation of foreign exchange assets.
B)Indian investors lend abroad will result increase in outflow of foreign currency. It will decrease supply of foreign currency in domestic economy. It will increase market exchange rate and show depreciation of domestic currency. It means that import have become costlier, therefore import will decrease.
Regards
a) Indian investor lend abroad recorded on the debit side in capital Account. Capital account of Bop records all those transactions between the residents of Country and rest of world which cause a change in assets or Liabilities of residents of country or its government. Lending to abroad by indian leads to creation of foreign exchange assets.
B)Indian investors lend abroad will result increase in outflow of foreign currency. It will decrease supply of foreign currency in domestic economy. It will increase market exchange rate and show depreciation of domestic currency. It means that import have become costlier, therefore import will decrease.
Regards