Foreign exchange reserves held by Pakistan most directly help the country to:
Correct answer: B. Meet external payment obligations and support exchange market stability
- A. Finance domestic salaries without taxation
- B. Meet external payment obligations and support exchange market stability
- C. Increase agricultural land without investment
- D. Replace the need for all government borrowing
Explanation
Foreign exchange reserves provide liquid external assets for paying imports, servicing external obligations and managing pressure in the foreign exchange market. They cannot replace taxation or eliminate the need for government borrowing.
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About Economy of Pakistan
Pakistan's economy is examined through agriculture, industry, services, trade, remittances, employment, population, poverty and regional development. The topic also covers GDP and national income, inflation, fiscal and monetary policy, taxation, public debt, the balance of payments, energy constraints and structural challenges, including the role of the State Bank and development planning.
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