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 Indias IT sector 2. Increasing the government expenditure 3. Remittances from Indians a

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Submitted by examrobotsa on

Q: 15 (IAS/2019)
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.

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,119,44,10,119,8,26

keywords: 

{'currency crisis': [0, 0, 0, 1], 'remittances': [0, 0, 0, 1], 'factors': [0, 0, 1, 0], 'contributors': [0, 0, 0, 2], 'foreign currency earnings': [0, 0, 0, 1], 'risk': [1, 1, 2, 4], 'government expenditure': [1, 0, 0, 1], 'india': [8, 1, 7, 13], 'indians': [8, 3, 13, 29], 'it sector': [0, 0, 0, 3]}

The correct answer is (b) 1 and 3 only.

India`s foreign currency earnings from the IT sector and remittances from Indians abroad are important factors that contribute to reducing the risk of a currency crisis. An increase in government expenditure can lead to inflationary pressures, which can, in turn, increase the risk of a currency crisis. Therefore, option 2 is incorrect.