Economic Awareness - Sectors of Indian Economy
Which of the following best explains why India adopted a gradual approach to capital account convertibility?
Which of the following best explains why India adopted a gradual approach to capital account convertibility?
hard Q10 of 15
Step-by-Step Solution
Step 1: Understand rationale for gradual capital account convertibility
Gradualism helps protect the economy from external shocks and maintain financial stability.Step 2: Confirm rationale
To protect from external shocks and ensure stability explains the approach.Step 3: Other explanations incorrect
IMF does not mandate; India has trade; immediate convertibility risks instability.Final Answer:
To protect the economy from external shocks and maintain financial stability → Option CQuick Check:
Gradual capital = stability protection ✅
Quick Trick: Gradual approach balances openness with economic stability.
Common Mistakes:
MISTAKES- Assuming IMF mandates or immediate full convertibility is beneficial.
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