Multiple choice

Directions: The short passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.

Currency convertibility is not by any means an unmixed blessing. There are several issues that need to be carefully examined before rushing headlong towards full convertibility. The first, obviously, is with reference to the advantages & costs of a fully convertible currency. The second issue concerns the distinction between convertibility on the current account and on the capital account and the sequencing of the two. The final issue has to do with the preconditions that have to exist in the domestic economy before it is possible to maintain a fully convertible currency. It is a moot question whether the Indian economy will achieve these in the near future.

What is the theme of the passage?

  1. Currency convertibility is not advisable in India at this stage.

  2. Indian policy makers must think hard before taking the plunge on the currency convertibility issue.

  3. Currency convertibility has several aspects requiring a thorough analysis.

  4. The issue of currency convertibility in India has brought forth several unsolved questions.

  5. Indian economy is not yet ready for currency convertibility on capital account.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

 The first line gives us hint that the author talks about 'currency convertibility'. The second line and last line indicate that many issues and questions need to be analyzed before going headlong for convertibility. This marks options (4).

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