New Enroll for RBI, PFRDA & NABARD Intro Class! April 18 at 9:15 PM

    Question

    Which of the following was NOT a consequence of the rupee

    devaluation implemented in 1991 as part of India's international currency adjustment?
    A Increased imports Correct Answer Incorrect Answer
    B Increased exports Correct Answer Incorrect Answer
    C Raised influx of foreign capital Correct Answer Incorrect Answer
    D Decreased imports Correct Answer Incorrect Answer

    Solution

    The 1991 devaluation of the rupee did not result in increased imports. On the contrary, the devaluation made imports more expensive, leading to decreased import demand. The other options were actual effects of the devaluation: Indian exports became more affordable in foreign markets, boosting export volumes; the weaker rupee made Indian investments more attractive to foreign investors, increasing foreign capital inflow; and as noted, imports decreased due to their higher cost following devaluation.

    Practice Next

    Relevant for Exams: