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      Question

      Match the following  economic indicators  with their 

      expected impact on an economy   An increase in the repo rate by the central bank   Depreciation of the domestic currency   A rise in the fiscal deficit  
      A 1 - Expansionary, 2 - Contractionary, 3 - Inflationar Correct Answer Incorrect Answer
      B 1 - Contractionary, 2 - Expansionary, 3 - Deflationarysa Correct Answer Incorrect Answer
      C 1 - Deflationary, 2 - Expansionary, 3 - Growth Stimulating Correct Answer Incorrect Answer
      D 1 - Inflationary, 2 - Neutral, 3 - Contractionary Correct Answer Incorrect Answer
      E 1 - Contractionary, 2 - Inflationary, 3 - Expansionary Correct Answer Incorrect Answer

      Solution

      • Repo Rate Increase (Contractionary):  Higher rates discourage borrowing and spending.  
      • Currency Depreciation (Inflationary):  Increases import costs, raising inflation.  
      • Fiscal Deficit Increase (Expansionary):  Higher government spending stimulates demand  

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