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      Question

      What is the expected impact of a $10/barrel increase in

      crude oil prices on India’s current account deficit (CAD)?
      A Increase CAD by 0.1% of GDP Correct Answer Incorrect Answer
      B Increase CAD by 0.2% of GDP Correct Answer Incorrect Answer
      C Increase CAD by 0.3% of GDP Correct Answer Incorrect Answer
      D No impact on CAD Correct Answer Incorrect Answer
      E Reduce CAD by 0.3% of GDP Correct Answer Incorrect Answer

      Solution

      A $10/barrel rise in crude oil prices could increase net imports by $13–14 billion, resulting in a 0.3% rise in the current account deficit (CAD). This scenario could negatively affect both corporate profitability and India’s GDP outlook.

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