Economic Awareness - Sectors of Indian Economy
Which of the following scenarios is most likely to cause depreciation of the Indian Rupee?
Which of the following scenarios is most likely to cause depreciation of the Indian Rupee?
medium Q15 of 15
Step-by-Step Solution
Step 1: Identify factors causing depreciation
Political uncertainty reduces investor confidence, leading to capital outflows and depreciation.Step 2: Evaluate options
Increase in interest rates and strong growth attract capital, causing appreciation; surplus current account strengthens currency.Final Answer:
Political uncertainty leading to reduced investor confidence → Option AQuick Check:
Political instability = currency depreciation ✅
Quick Trick: Political stability supports currency strength.
Common Mistakes:
MISTAKES- Confusing economic growth effects with depreciation causes.
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