Q. . With reference to “Foreign Exchange Reserves” consider the following statements:
1.The Reserve bank of India (RBI) is the custodian of the foreign exchange reserves in India.
2.A country can build up its reserves if there are more imports than exports.
3.Foreign exchange reserves are usually used for backing the exchange rate and influencing monetary policy.
Which of the statements given above are correct?
Answer: C
Notes:
Explanation –
Statement 1 and 3 are correct. The Reserve bank of India (RBI) is the custodian of the foreign exchange reserves in India. Foreign exchange reserves are usually used for backing the exchange rate and influencing monetary policy.
Statement 2 is incorrect. A country can build up its reserves if there are more exports than imports.
Source: ForumIAS
