Attempt this previous-year question. The correct option stays hidden until you choose.
In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis?
1. The foreign currency earnings of India’s IT sector
2. Increasing the government expenditure
3. Remittances from Indians abroad
Select the correct answer using the code given below.
Pick an option to check yourself.
• Correct Answer: B
• IT sector foreign currency earnings and remittances from Indians abroad boost forex reserves and improve the current account balance.
• Increasing government expenditure widens fiscal deficit and may trigger inflation, potentially weakening the currency.
• Statement 2 is incorrect; statements 1 and 3 are correct.
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