📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    When India’s Capital Account Surplus exceeds Current

    Account Deficit, then:
    A Forex reserve will increase Correct Answer Incorrect Answer
    B Forex reserve will decrease Correct Answer Incorrect Answer
    C No effect of forex reserve Correct Answer Incorrect Answer
    D May increase or decrease Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    When the Capital Account has surplus that exceeds the deficit of Current Account, then there is a net surplus in Balance of Payment. In other words, there is net inflow of foreign currencies. This will increase the forex reserve of RBI. 

    Practice Next
    More Static GA Questions
    ask-question