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GS Economy Economic Concepts
Q.

Which of the following would result in appreciation of the domestic currency (rupee) in terms of foreign currency (US dollar)?

1. Rise in the interest rates in India.

2. Increase in income of Indians in comparison to Americans.

2. Aggregate demand of India grows faster than the rest of the world’s demand.

Select the correct answer using the code given below.
Explanation:

ANSWER: (A) 

Option 1 is correct.

  • A rise in the interest rates at home often leads to an appreciation of the domestic currency.

Option 2 is correct.

  • When income increases, consumer spending increases. Spending on imported goods is also likely to increase. When imports increase, there is a depreciation of the domestic currency.

Option 3 is correct.

  • In general, other things remaining equal, a country whose aggregate demand grows faster than the rest of the world’s normally finds its currency depreciating because its imports grow faster than its exports.

Q.

Which among the following are the effects of Globalisation?

1. Increase in employment opportunities.

2. Upliftment of standards of living. 

3. Reduction in economic disparities.

4. Rising income of the masses.

Select the correct answer using the code given below:
Explanation:

ANSWER: (B)

  • Although globalisation is generally understood to mean integration of the economy of the country with the world economy, it is a complex phenomenon. 
  • Globalisation attempts to establish links in such a way that the happenings in India can be influenced by events happening miles away. 
  • It is turning the world into one whole or creating a borderless world. 
  • Increase in employment: In India labour is cheap. This feature motivates the big companies in the west to outsource employees from other regions and cause more employment.
  • Increase in compensation: After globalisation, the level of compensation has increased as compared to the domestic companies due to the skill and knowledge a foreign company offers. This opportunity also emerged as an alteration of the management structure.
  • High standard of living: With the outbreak of globalisation, the Indian economy and the standard of living of an individual has increased. This change is notified with the purchasing behaviour of a person, especially with those who are associated with foreign companies. 

Globalisation is a strategy of the developed countries to expand their markets in other countries. According to some critics, it has compromised the welfare and identity of people belonging to poor countries. It has further been pointed out that market-driven globalisation has widened the economic disparities among nations and people. 

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