Question
Which of the following correctly describes economic
indicators and their expected impact on an economy ? 1. An increase in the repo rate by the central bank  2. Depreciation of the domestic currency  3. A rise in the fiscal deficit ÂSolution
Explanation: Â
- Repo Rate Increase (Contractionary): Higher rates discourage borrowing and spending. Â
- Currency Depreciation (Inflationary): Increases import costs, raising inflation. Â
- Fiscal Deficit Increase (Expansionary): Higher government spending stimulates demand Â
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