Consider the following statements: Full convertibility of the rupee may mean 1. its free float with other international currencies. 2. its direct exchange with any other international currency at any prescribed place inside and outside the country. 3. it

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Q: 137 (IAS/2002)
Consider the following statements: Full convertibility of the rupee may mean
1. its free float with other international currencies.
2. its direct exchange with any other international currency at any prescribed place inside and outside the country.
3. it acts just like any other international currency.
Which of these statements are correct?

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,102,120,79,17,24,102

keywords: 

{'full convertibility': [0, 0, 1, 0], 'other international currencies': [0, 0, 1, 0], 'other international currency': [0, 0, 1, 0], 'rupee': [1, 0, 1, 0], 'direct exchange': [0, 0, 1, 0], 'free float': [0, 0, 1, 0]}

Full convertibility of the rupee refers to the freedom to convert local currency into foreign currency and vice versa at market determined rates of exchange.

Option 1 comprises of two elements i.e., the free float of rupee with other international currencies and its direct exchange with any other international currency at any prescribed place inside and outside the country.

For option 2, it includes the elements of free float of rupee and it acting just like any other international currency.

In option 3, the combination includes direct exchange of rupee with other currencies as well as it acting like any other international currency.

Looking at these aspects, when a currency is fully convertible, it involves all three conditions i.e., free float with other currencies, direct exchange anywhere, and acting like any other international currency. Hence, option 4, which includes all three of these elements, is the correct answer.

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