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Consider the following statements.
- Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market.
- Lower value of Indian rupee against the dollar keeps import bills lower for India.
- Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.
How many of the above options are correct?
- a)Only one
- b)Only two
- c)All three
- d)None
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements. Generally tightening of monetary po...
Statement 1: Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market.
When the US Federal Reserve tightens its monetary policy, it typically raises interest rates. This leads to a decrease in the availability of cheap funds in the US, making investments in the US more attractive compared to other countries. As a result, foreign portfolio investors (FPIs) tend to withdraw their investments from other countries, including India, and move them to the US. This withdrawal of funds by FPIs is known as a sell-off.
The sell-off by FPIs in the Indian stock market can have a negative impact on stock prices, as the demand for Indian stocks decreases. This can result in a decline in the overall value of the Indian stock market.
Therefore, the statement that tightening of monetary policy by the US Federal Reserve leads to FPI sell-off in the Indian stock market is correct.
Statement 2: Lower value of Indian rupee against the dollar keeps import bills lower for India.
When the value of the Indian rupee decreases against the US dollar, it means that the Indian rupee has depreciated. A lower value of the Indian rupee makes imports more expensive for India because it takes more rupees to purchase the same amount of foreign currency. This means that India would have to spend more rupees to pay for the same amount of imports.
Therefore, the statement that a lower value of the Indian rupee against the dollar keeps import bills lower for India is incorrect. In fact, a lower value of the Indian rupee increases import bills for India.
Statement 3: Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.
When the value of the Indian rupee decreases against the US dollar, it means that the Indian rupee has depreciated. A lower value of the Indian rupee makes foreign currencies, such as the US dollar, more expensive in terms of Indian rupees. This means that Indian travellers and students studying abroad would have to spend more rupees to purchase the same amount of foreign currency.
Therefore, the statement that a lower value of the Indian rupee against the dollar is beneficial for travellers and students studying abroad is incorrect. In fact, a lower value of the Indian rupee makes it more expensive for travellers and students studying abroad.
In conclusion, only statement 1 is correct.
When the US Federal Reserve tightens its monetary policy, it typically raises interest rates. This leads to a decrease in the availability of cheap funds in the US, making investments in the US more attractive compared to other countries. As a result, foreign portfolio investors (FPIs) tend to withdraw their investments from other countries, including India, and move them to the US. This withdrawal of funds by FPIs is known as a sell-off.
The sell-off by FPIs in the Indian stock market can have a negative impact on stock prices, as the demand for Indian stocks decreases. This can result in a decline in the overall value of the Indian stock market.
Therefore, the statement that tightening of monetary policy by the US Federal Reserve leads to FPI sell-off in the Indian stock market is correct.
Statement 2: Lower value of Indian rupee against the dollar keeps import bills lower for India.
When the value of the Indian rupee decreases against the US dollar, it means that the Indian rupee has depreciated. A lower value of the Indian rupee makes imports more expensive for India because it takes more rupees to purchase the same amount of foreign currency. This means that India would have to spend more rupees to pay for the same amount of imports.
Therefore, the statement that a lower value of the Indian rupee against the dollar keeps import bills lower for India is incorrect. In fact, a lower value of the Indian rupee increases import bills for India.
Statement 3: Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.
When the value of the Indian rupee decreases against the US dollar, it means that the Indian rupee has depreciated. A lower value of the Indian rupee makes foreign currencies, such as the US dollar, more expensive in terms of Indian rupees. This means that Indian travellers and students studying abroad would have to spend more rupees to purchase the same amount of foreign currency.
Therefore, the statement that a lower value of the Indian rupee against the dollar is beneficial for travellers and students studying abroad is incorrect. In fact, a lower value of the Indian rupee makes it more expensive for travellers and students studying abroad.
In conclusion, only statement 1 is correct.
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Consider the following statements. Generally tightening of monetary po...
- Only statement 1 is correct.
- Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market.
- Analysts said a lower rupee against the dollar keeps import bills higher. Higher inflation is detrimental to the overall market. If the rupee does not strengthen, FPI outflows will continue, which is another negative. A strong dollar is good for export-oriented companies, but bad for import-oriented industries such as oil, gas and chemicals. With the dip in the rupee, oil imports and other imported components will get costlier, which will further lead to higher inflation. Travellers and students studying abroad will have to shell out more rupees to buy dollars from banks.
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Consider the following statements. Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market. Lower value of Indian rupee against the dollar keeps import bills lower for India. Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.How many of the above options are correct?a)Only oneb)Only twoc)All threed)NoneCorrect answer is option 'A'. Can you explain this answer?
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Consider the following statements. Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market. Lower value of Indian rupee against the dollar keeps import bills lower for India. Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.How many of the above options are correct?a)Only oneb)Only twoc)All threed)NoneCorrect answer is option 'A'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements. Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market. Lower value of Indian rupee against the dollar keeps import bills lower for India. Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.How many of the above options are correct?a)Only oneb)Only twoc)All threed)NoneCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements. Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market. Lower value of Indian rupee against the dollar keeps import bills lower for India. Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.How many of the above options are correct?a)Only oneb)Only twoc)All threed)NoneCorrect answer is option 'A'. Can you explain this answer?.
Consider the following statements. Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market. Lower value of Indian rupee against the dollar keeps import bills lower for India. Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.How many of the above options are correct?a)Only oneb)Only twoc)All threed)NoneCorrect answer is option 'A'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements. Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market. Lower value of Indian rupee against the dollar keeps import bills lower for India. Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.How many of the above options are correct?a)Only oneb)Only twoc)All threed)NoneCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements. Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market. Lower value of Indian rupee against the dollar keeps import bills lower for India. Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.How many of the above options are correct?a)Only oneb)Only twoc)All threed)NoneCorrect answer is option 'A'. Can you explain this answer?.
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Consider the following statements. Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market. Lower value of Indian rupee against the dollar keeps import bills lower for India. Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.How many of the above options are correct?a)Only oneb)Only twoc)All threed)NoneCorrect answer is option 'A'. Can you explain this answer?, a detailed solution for Consider the following statements. Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market. Lower value of Indian rupee against the dollar keeps import bills lower for India. Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.How many of the above options are correct?a)Only oneb)Only twoc)All threed)NoneCorrect answer is option 'A'. Can you explain this answer? has been provided alongside types of Consider the following statements. Generally tightening of monetary policy by the US Federal Reserve leads to Foreign portfolio investments (FPI) sell-off in the Indian Stock market. Lower value of Indian rupee against the dollar keeps import bills lower for India. Lower value of Indian rupee against the dollar is beneficial for travellers and students studying abroad.How many of the above options are correct?a)Only oneb)Only twoc)All threed)NoneCorrect answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
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