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MCQs 2026

1221.
What is the implication of a 'manageable current account deficit' for foreign exchange reserves?
A It leads to a depletion of reserves
B It contributes to the accumulation of reserves
C It has no impact on reserves
D It necessitates increased foreign borrowing
1222.
The term 'foreign exchange reserves' refers to:
A Domestic currency held by individuals
B Assets held by a central bank in foreign currencies
C Gold reserves held by commercial banks
D Foreign debt owed by the government
1223.
A 'buffer against external shocks' means:
A Increased vulnerability to global economic downturns
B A reserve to absorb negative impacts from international events
C A need for more foreign borrowing
D A reduction in domestic economic activity
1224.
What does 'macroeconomic stability' refer to in this context?
A High and volatile inflation
B Consistent and predictable economic conditions
C Rapid economic decline
D High unemployment rates
1225.
The record level of foreign exchange reserves enhances India's:
A Financial vulnerability
B Financial resilience and global standing
C Dependence on international financial institutions
D Exposure to external economic shocks
1226.
Which of the following is NOT mentioned as a factor contributing to the surge in foreign exchange reserves?
A Strong remittances
B Robust foreign direct investment (FDI)
C Decreased portfolio inflows
D Portfolio inflows into Indian equity and debt markets
1227.
A significant increase in foreign exchange reserves provides the RBI with:
A Limited flexibility to intervene in the market
B Ample flexibility to manage exchange rate volatility
C Increased dependence on foreign aid
D Reduced capacity to meet external obligations
1228.
What is a key role of the RBI in managing foreign exchange reserves?
A To deplete reserves to manage inflation
B To ensure macroeconomic stability and provide a buffer against external shocks
C To actively devalue the Indian Rupee
D To reduce foreign capital inflows
1229.
What does the robust accumulation of foreign exchange reserves signify?
A Weak external sector performance
B Strong external sector performance and macroeconomic stability
C A widening current account deficit
D Increased reliance on external borrowing
1230.
What is the record high level of India's foreign exchange reserves as of March 31, 2026?
A $600 billion
B $650 billion
C $700 billion
D $750 billion