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Which of the following challenges in the global economy can negatively affect the growth in emerging economies like India?
1. Increase in interest rates by the U.S. Federal reserve
2. Uncertainty in Prices of commodities such as crude oil
3. Retreat from globalisation and increasing protectionism.
Select the correct answer using the codes given below.
- a)1 and 2 only
- b)2 and 3 only
- c)1 only
- d)1, 2 and 3
Correct answer is option 'D'. Can you explain this answer?
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Which of the following challenges in the global economy can negatively...
Analysis of Challenges in the Global Economy for Emerging Economies
- Effect of Increase in U.S. Federal Reserve Interest Rates:
- If the Federal interest rate in the USA rises, it leads to a scenario where U.S. citizens tend to save more and spend less, resulting in decreased investments in countries like India in terms of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI).
- This increase in savings by U.S. citizens leads to a reduced flow of dollars in international markets, causing the value of the dollar to appreciate against other currencies, including the Indian Rupee. Consequently, the Rupee depreciates in value against the dollar, impacting the economy of emerging countries like India negatively.
- Impact of Uncertainty in Prices of Commodities such as Crude Oil:
- International crises affecting the supply of crude oil can result in a scarcity of oil in the market, leading to a surge in crude oil prices within India.
- Emerging economies like India heavily reliant on imports of crude oil will have to allocate more foreign reserves to purchase oil at elevated prices, thereby affecting their economic growth adversely.
- Consequences of Retreat from Globalization and Increasing Protectionism:
- Retreating from globalization and adopting protectionist measures may signify a move towards a closed economy, limiting international trade and financial transactions.
- Such protectionist policies hinder the free flow of goods and services across borders, impacting economies like India negatively by restricting market access and potentially leading to trade wars.
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Which of the following challenges in the global economy can negatively...
Challenges in the Global Economy affecting Emerging Economies like India
1. Increase in interest rates by the U.S. Federal reserve
- An increase in interest rates by the U.S. Federal Reserve can lead to a capital outflow from emerging economies like India as investors seek higher returns in the U.S.
- This can result in a depreciation of the local currency, making imports more expensive and putting pressure on inflation.
- Higher interest rates can also increase borrowing costs for businesses and consumers, leading to a slowdown in economic growth.
2. Uncertainty in Prices of commodities such as crude oil
- Emerging economies like India heavily depend on imports of commodities like crude oil for energy production and other essential needs.
- Fluctuations in commodity prices can disrupt the balance of trade, leading to higher import bills and trade deficits.
- This can put pressure on the current account balance and the exchange rate, affecting the overall economic stability and growth prospects.
3. Retreat from globalization and increasing protectionism
- A retreat from globalization and the rise of protectionist policies can negatively impact emerging economies like India that rely on international trade for growth.
- Trade barriers and tariffs imposed by other countries can reduce export opportunities for Indian businesses, leading to a decline in revenues and economic growth.
- This can also disrupt global supply chains, increase production costs, and hinder the competitiveness of Indian industries in the global market.
In conclusion, the combination of these challenges in the global economy can significantly affect the growth prospects of emerging economies like India by creating uncertainties, increasing costs, and limiting opportunities for trade and investment. It is essential for policymakers to address these challenges through appropriate measures to ensure sustainable and inclusive growth in the long run.
1. Increase in interest rates by the U.S. Federal reserve
- An increase in interest rates by the U.S. Federal Reserve can lead to a capital outflow from emerging economies like India as investors seek higher returns in the U.S.
- This can result in a depreciation of the local currency, making imports more expensive and putting pressure on inflation.
- Higher interest rates can also increase borrowing costs for businesses and consumers, leading to a slowdown in economic growth.
2. Uncertainty in Prices of commodities such as crude oil
- Emerging economies like India heavily depend on imports of commodities like crude oil for energy production and other essential needs.
- Fluctuations in commodity prices can disrupt the balance of trade, leading to higher import bills and trade deficits.
- This can put pressure on the current account balance and the exchange rate, affecting the overall economic stability and growth prospects.
3. Retreat from globalization and increasing protectionism
- A retreat from globalization and the rise of protectionist policies can negatively impact emerging economies like India that rely on international trade for growth.
- Trade barriers and tariffs imposed by other countries can reduce export opportunities for Indian businesses, leading to a decline in revenues and economic growth.
- This can also disrupt global supply chains, increase production costs, and hinder the competitiveness of Indian industries in the global market.
In conclusion, the combination of these challenges in the global economy can significantly affect the growth prospects of emerging economies like India by creating uncertainties, increasing costs, and limiting opportunities for trade and investment. It is essential for policymakers to address these challenges through appropriate measures to ensure sustainable and inclusive growth in the long run.
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Which of the following challenges in the global economy can negatively affect the growth in emerging economies like India?1. Increase in interest rates by the U.S. Federal reserve2. Uncertainty in Prices of commodities such as crude oil3. Retreat from globalisation and increasing protectionism.Select the correct answer using the codes given below.a)1 and 2 onlyb)2 and 3 onlyc)1 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer?
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Which of the following challenges in the global economy can negatively affect the growth in emerging economies like India?1. Increase in interest rates by the U.S. Federal reserve2. Uncertainty in Prices of commodities such as crude oil3. Retreat from globalisation and increasing protectionism.Select the correct answer using the codes given below.a)1 and 2 onlyb)2 and 3 onlyc)1 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer? for UGC NET 2024 is part of UGC NET preparation. The Question and answers have been prepared according to the UGC NET exam syllabus. Information about Which of the following challenges in the global economy can negatively affect the growth in emerging economies like India?1. Increase in interest rates by the U.S. Federal reserve2. Uncertainty in Prices of commodities such as crude oil3. Retreat from globalisation and increasing protectionism.Select the correct answer using the codes given below.a)1 and 2 onlyb)2 and 3 onlyc)1 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for UGC NET 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following challenges in the global economy can negatively affect the growth in emerging economies like India?1. Increase in interest rates by the U.S. Federal reserve2. Uncertainty in Prices of commodities such as crude oil3. Retreat from globalisation and increasing protectionism.Select the correct answer using the codes given below.a)1 and 2 onlyb)2 and 3 onlyc)1 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer?.
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