The sharp depredation of rupee in the Forex market in the year 2011 was due to 1. flight to safety by foreign investors 2. meltdown in European markets 3. inflation in emerging market economies 4. lag effect of monetary policy tightening Select the correc

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Q: 28 (CDS-I/2013)
The sharp depredation of rupee in the Forex market in the year 2011 was due to—
1. flight to safety by foreign investors
2. meltdown in European markets
3. inflation in emerging market economies
4. lag effect of monetary policy tightening

Select the correct answer using the codes given below—

question_subject: 

Economics

question_exam: 

CDS-I

stats: 

0,100,214,91,68,55,100

keywords: 

{'forex market': [0, 0, 0, 1], 'rupee': [1, 0, 1, 0], 'monetary policy': [0, 0, 0, 2], 'sharp depredation': [0, 0, 0, 1], 'inflation': [0, 1, 0, 3], 'market economies': [0, 0, 0, 1], 'european markets': [0, 0, 0, 1], 'foreign investors': [0, 0, 0, 4], 'lag effect': [0, 0, 0, 1], 'meltdown': [0, 0, 0, 1]}

The correct answer for this question is option 4, which states that the sharp depreciation of rupee in the Forex market in 2011 was due to flight to safety by foreign investors, meltdown in European markets, inflation in emerging market economies, and lag effect of monetary policy tightening.

Let`s dissect each option to understand why they are either correct or incorrect:

1. Option 1 states that the depreciation of rupee was due to flight to safety by foreign investors, meltdown in European markets, and inflation in emerging market economies. This option is correct because all three factors can contribute to the depreciation of a currency.

2. Option 2 states that the depreciation of rupee was due to flight to safety by foreign investors, meltdown in European markets, and lag effect of monetary policy tightening. This option is incorrect because it does not include the factor of inflation in emerging market economies, which is also a significant factor in currency depreciation.

3. Option 3 states that the depreciation of rupee was due to inflation in emerging market economies and lag effect of monetary policy tightening. This option is incorrect because it does not include the factors of flight to safety by foreign investors and meltdown in European markets, which are also contributing factors.

4. Option 4 states that the depreciation of rupee

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