SSC Economics Sample Paper NCERT Sample Paper-4

  • question_answer
    One of the important goals of the economic liberalization of 1991 is to achieve full convertibility of the Indian rupee. This is being advocated because

    A)  Convertibility of the rupee will stabilize its exchange value against major currencies of the world.

    B)  It will attract more foreign capital inflow in India.

    C)  It will promote exports.

    D)  It will help India to secure loans from the world financial markets on attractive terms.

    Correct Answer: B

    Solution :

    [b] The Government when introduced the Partial convertibility of Rupee in 1992, had announced its intention to introduce the full convertibility on the current account in 3-5 years. The full convertibility means unified market determined exchange rate regime. Encouraged with the success of the LERMS, the government introduced the full convertibility of Rupee in Trade account from March 1993 onwards. With this the dual exchange rate system was abolished and LERMS was now based upon the open market exchange. The full convertibility of Rupee was followed by stability in the Rupee Rate in the next many months coming up.

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