Which of the following pairs are correctly matched ? I. Increase in foreign exchange reserves ................. Monetary expansion II. Low import growth rate in India ................. Recession in Indian Industry III. Euro-issues ................ Shares held by Indian companies in European countries IV. Portfolio investment ...................... Foreign institutional investors Select the correct answer by using the following codes : Codes :

I is correctly matched because accumulation of foreign exchange reserves through capital inflows typically increases domestic money supply (monetary expansion) unless the central bank sterilizes operations, linking reserve build-up to monetary expansion effects [1]. II is treated as correct in this context since a sustained fall in import growth often signals weak domestic demand and reduced industrial activity, consistent with recessionary conditions in industry [1]. III is incorrect: “Euro-issues” are securities issued in euro/Euro-markets (eurobonds/euro-equity) and do not mean shares held by Indian firms in Europe [2]. IV is correct because portfolio investment refers to foreign portfolio flows—equity/debt purchased by foreign institutional investors (FIIs/FPI) in the domestic market [3].

Sources

1. [1] https://www.elibrary.imf.org/downloadpdf/view/journals/001/2001/192/001.2001.issue-192-en.pdf
2. [2] https://dde.svu.edu.in/study-material/SLM/MCOM_104_International%20Financial%20Management.pdf
3. [3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.23 Foreign Investment > p. 99