Which of the following best describes the term import cover, sometimes seen in the news?

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Q: 93 (IAS/2016)

Which of the following best describes the term import cover, sometimes seen in the news?

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,125,73,24,20,29,125

keywords: 

{'term import cover': [0, 0, 0, 1], 'imports': [0, 0, 0, 1], 'exports': [0, 0, 2, 1], 'countrys international reserves': [0, 0, 0, 1], 'gross domestic product': [0, 0, 1, 3], 'total value': [0, 0, 0, 2], 'ratio': [1, 0, 1, 12], 'countries': [1, 0, 2, 6], 'value': [0, 0, 1, 0]}

The term import cover, sometimes seen in the news, refers to the number of months of a country`s imports that could be paid for by its international reserves. This means that if a country`s imports cost $10 billion per month and its international reserves are $60 billion, then its import cover would be six months.

Option 4 correctly describes the meaning of import cover. The term is an important economic indicator as it reflects a country`s ability to pay for its imports and maintain its external payment obligations. A higher import cover implies a greater ability to withstand external economic shocks, such as fluctuations in commodity prices or adverse global economic conditions.

Import cover is a commonly used metric by international financial institutions such as the International Monetary Fund (IMF) and the World Bank. These institutions monitor import cover levels to determine a country`s external vulnerability and ability to manage its external payments.

In summary, Option 4 - "It is the number of months of imports that could be paid for by a country`s international reserves" best describes the term import cover.