Multiple choice

Consider the following actions which the Government can take:

  1. Devaluing the domestic currency.
  2. Reduction in the export subsidy.
  3. Adopting suitable policies which attract greater FDI and more funds from FIIs.

  1. 1 and 2

  2. 2 and 3

  3. 3 only

  4. 1 and 3
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Current account deficit can be reduced by devaluating the domestic currency (boosting export), increase in the export subsidy (boosting export) and adopting suitable policies which attract greater FDI and more funds from FIIs.

Keep practicing — related questions