UPSC Exam > UPSC Questions > Consider the following statements regarding ...
Start Learning for Free
Consider the following statements regarding Dutch Disease:
It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.
It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
Consider the following statements regarding Dutch Disease:It is an ec...
Explanation:
Dutch Disease:
Dutch Disease is an economic term used to describe the negative consequences that can arise from a significant increase in a nation's currency value. This term originated in the 1970s when the Netherlands experienced a boom in natural gas exports, leading to a sharp appreciation of their currency, the Dutch guilder.
Statement 1:
The first statement is correct. Dutch Disease is characterized by the appreciation of a nation's currency due to the increase in revenues from natural resources or other sectors. This appreciation can have negative effects on other sectors of the economy, such as manufacturing and agriculture, making their products more expensive and less competitive in the global market.
Statement 2:
The second statement is also correct. As a result of Dutch Disease, domestic enterprises face challenges in remaining competitive due to the high exchange rate. This can lead to an increase in imports, as foreign goods become relatively cheaper, and a decrease in exports, as domestic products become more expensive for foreign buyers.
Therefore, both statements are accurate in describing the impact of Dutch Disease on an economy. It is essential for policymakers to be aware of these effects and implement strategies to mitigate the negative consequences of currency appreciation.
Dutch Disease:
Dutch Disease is an economic term used to describe the negative consequences that can arise from a significant increase in a nation's currency value. This term originated in the 1970s when the Netherlands experienced a boom in natural gas exports, leading to a sharp appreciation of their currency, the Dutch guilder.
Statement 1:
The first statement is correct. Dutch Disease is characterized by the appreciation of a nation's currency due to the increase in revenues from natural resources or other sectors. This appreciation can have negative effects on other sectors of the economy, such as manufacturing and agriculture, making their products more expensive and less competitive in the global market.
Statement 2:
The second statement is also correct. As a result of Dutch Disease, domestic enterprises face challenges in remaining competitive due to the high exchange rate. This can lead to an increase in imports, as foreign goods become relatively cheaper, and a decrease in exports, as domestic products become more expensive for foreign buyers.
Therefore, both statements are accurate in describing the impact of Dutch Disease on an economy. It is essential for policymakers to be aware of these effects and implement strategies to mitigate the negative consequences of currency appreciation.
Free Test
FREE
| Start Free Test |
Community Answer
Consider the following statements regarding Dutch Disease:It is an ec...
Statement 1 is correct. The “Dutch disease" is a term that describes the Netherlands in the 1960s where a discovery of gas deposits in the North Sea, and the income boom that followed led to a real appreciation of the exchange rate that crowded out manufacturing exports. So, it is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.
Statement 2 is correct. Dutch disease is a shorthand way of describing the paradox which occurs when good news, such as the discovery of large oil reserves, harms a country's broader economy. Increase in net exports drives up a country’s exchange rate which makes others export non-competitive in the world market and impairs the ability of domestic products to compete with imports i.e it leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.
Attention UPSC Students!
To make sure you are not studying endlessly, EduRev has designed UPSC study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in UPSC.
|
Explore Courses for UPSC exam
|
|
Similar UPSC Doubts
Top Courses for UPSCView all
Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
Question Description
Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
Solutions for Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?, a detailed solution for Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Consider the following statements regarding Dutch Disease:It is an economic term used for the negative consequences that can arise from an appreciation of a nation’s currency.It leads to reducing the competitiveness of domestic enterprises, thereby boosting imports and hurting exports.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice UPSC tests.
|
|
Explore Courses for UPSC exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup