Final answer:
Vikram's monthly remittances to his parents in India are considered a transfer in the current account and do not directly impact the trade deficit. Therefore, this activity will have no impact on the trade deficit (option C).
Step-by-step explanation:
The activity of Vikram, an Indian national working for Microsoft in New York sending $300 every month to his parents in Bangalore, India, will have an effect on India's current account but not specifically on the trade deficit. The trade deficit refers to the difference between the value of a country's imports and its exports. Vikram's remittances are considered a transfer and counted in the current account, which includes the trade balance, but they do not directly impact the trade in goods and services. Thus, the correct answer to whether this activity will increase, decrease, have no impact, or eliminate the trade deficit is C) Have no impact on the trade deficit.
India's overall trade deficit is affected by multiple factors such as imports, exports, investment flows, and government policies. Actions like lifting investment limitations and improving capital markets to help self-employed Indians start businesses can influence the current account deficit, but individual remittances like those of Vikram, despite being part of the current account, would typically not have a direct and immediate influence on the trade balance of the country.