Practicing Success
Arrange the following steps to be occurred in a sequential order in order to increase the foreign exchange reserve of the economy : A, Increase in purchasing power of non-residents B. More inflow of foreign exchange in the domestic market. C. Export promotion of domestic goods & services. D. Devaluation of Indian Currency (₹) by RBI. E. More inflow of FDI's and FII's in domestic market. Choose the correct answer from the options given below : |
C, D, E, A, B A, D, B, C, E D, A, C, E, B B, D, A, C, E |
D, A, C, E, B |
The correct answer is option (3) : D, A, C, E, B To increase the foreign exchange reserve of the economy, you would typically follow these steps in a sequence order : Devaluation of Indian Currency (D) by RBI : Devaluation is the first step. Increase in purchasing power of non-residents (A) : Devaluation will make the imports cheaper for foreign residents (non residents) as they get more rupees for one dollar after devaluation. This can encourage non-residents to spend more in the domestic economy, leading to an increase in foreign exchange reserves. Export promotion of domestic goods & services (C) : As a result of demand from non residents of Indian products, the exports will increase. More inflow of FDI's and FII's in the domestic market (E) : Attracting foreign direct investment (FDI) and foreign institutional investments (FII) can further increase foreign exchange reserves. More inflow of foreign exchange in the domestic market (B) : This step completes the process, with increased foreign exchange reserves as a result of the preceding actions. |