In the context of an open economy, the term "forex" is an abbreviation for:

Correct option is D

The correct answer is (d) Foreign Exchange.

• In economic and financial contexts, "forex" stands for "Foreign Exchange," which refers to the market and system through which currencies of different countries are traded.

• Forex plays a vital role in open economies by enabling the conversion of one currency into another for purposes such as trade, investment, and tourism.

• It determines currency exchange rates, facilitates international transactions, and impacts balance of payments and foreign reserves.

• The foreign exchange market is the largest financial market in the world in terms of daily trading volume.

• Other options like Foreign Expenditure Ratio or Formal Exchange Rate are not standard terms in economics.

Information Booster:

1. Forex markets operate 24 hours a day, five days a week, across major financial centers worldwide.

2. Exchange rates fluctuate based on supply and demand, economic indicators, interest rates, and geopolitical events.

3. Forex trading involves spot transactions, forwards, futures, options, and swaps.

4. Central banks intervene in forex markets to stabilize or influence their national currency values.

5. Forex reserves are critical for a country’s economic stability and ability to pay for imports.

6. In India, the Reserve Bank of India manages forex reserves and exchange rate policies.

7. Forex affects inflation, exports, imports, and foreign direct investment in an open economy.