Which of the following pairs are correctly matched? I. Increase in foreign exchange reserves Monetary expansion II. Low import growth rate in India Recession in Indian Industry III. Euro issues Shares held by Indian companies in European countries IV. Portfolio investment Foreign institutional investors Select the correct answer by using the following codes: Codes:
- AI, II and IVCorrect
- BIII and IV
- CI, II and III
- DI, II, III and IV
Explanation
Explanation of why Option A is correct:
Statement I is correct because when foreign exchange reserves increase, the central bank buys foreign currency and releases equivalent domestic currency into the economy, leading to monetary expansion.
Statement II is correct because a significant portion of Indian imports consists of raw materials and capital goods. A low import growth rate often indicates sluggish manufacturing activity and low demand, which are signs of a recession in industry.
Statement III is incorrect because Euro issues refer to securities like Global Depository Receipts issued by Indian companies in the international market to raise foreign capital. They are not shares held by Indian companies in European countries.
Statement IV is correct because investments by Foreign Institutional Investors in the Indian stock market are a primary component of portfolio investment.
Since statements I, II, and IV are correct, Option A is the right answer.
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