Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Indian Economic Development: Liberalisation, Privatisation and Globalisation - An Appraisal

Question:

Which of the following statement is incorrect in the context of FDI?

Options:

It means investment of foreign assets into domestic structures, equipment and organisations.

It includes foreign investment into the stock markets.

It is durable and generally useful whether things go well or badly.

None of the above

Correct Answer:

It includes foreign investment into the stock markets.

Explanation:

Foreign Direct Investment : Investment of foreign assets into domestic structures, equipment and organisations. It does not include foreign investment into the stock markets. Foreign direct investment is thought to be more useful to a country than investments in the equity of its companies because equity investments are potentially ‘hot money’ which can leave at the first sign of trouble, whereas FDI is durable and generally useful whether things go well or badly.