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Current Affairs·Easy

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.

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.

Options

  1. a.

    1 only

  2. b.

    1 and 3 only

    Correct answer
  3. c.

    2 only

  4. d.

    1, 2 and 3

Explanation

A currency crisis is brought on by a decline in the value of a country's currency. This decline in value negatively affects an economy by creating instabilities in exchange rates, meaning that one unit of a certain currency no longer buys as much as it used to in another currency.
Foreign currency earnings and Remittances contribute to the strengthening of the rupee. Hence statement 1 and 3 is correct.
Increasing government Expenditure will have no effect on the the value of currency. Hence statement 2 is not correct.

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