Indian Economy (International Economics) by Gaurav Bansal

Category: GS -III,

Test Date: 26 Jun 2023 07:00 AM

Evaluated: Yes

Indian Economy (International Economics) by Gaurav Bansal

Instruction:

There will be 2 questions carrying 10 marks each. Write your answers in 150 words
Any page left blank in the answer-book must be crossed out clearly.
Evaluated Copy will be re-uploaded on the same thread after 2 days of uploading the copy.
Discussion of the question and one to one answer improvement session of evaluated copies will be conducted through Google Meet with concerned faculty. You will be informed via mail or SMS for the discussion.

Question #1. Discuss the concept of de-dollarization and its implications for global financial stability. Substantiate your answer with relevant examples and case studies.

Question #2.Examine the causes and consequences of currency depreciation in an economy. Discuss the measures that can be taken to mitigate its adverse effects.

(Examiner will pay special attention to the candidate's grasp of his/her material, its relevance to the subject chosen, and to his/ her ability to think constructively and to present his/her ideas concisely, logically and effectively).

STEPS & INSTRUCTIONS for uploading the answers

Step 1 - The Question for the day is provided below these instructions. It will be available at 7:00 AM.

Step 2 - Uploading of Answers : Write the answer in A4 Sheet leaving proper margins for comments and feedback and upload the PDF in MY ACCOUNT section. Click on the option of SUBMIT COPY to upload the PDF.

Step 3 - Deadline for Uploading Answers: The students shall upload their answers by 7:00 PM in the evening same day. The first 50 copies will be evaluated.

Step 4 - Feedback : Mentors will give their feedback for the answers uploaded. For more personalised feedback, join our telegram channel by clicking on the link https://t.me/mains_answer_writing_cse . A one-to-one session will be conducted with the faculty after copy evaluation in 72 Hrs.

Model Answer

Question #1. Discuss the concept of de-dollarization and its implications for global financial stability. Substantiate your answer with relevant examples and case studies.

Ans

Meaning of de-dollarization
Why is dollar king of international trade and reserves:
1. Explain Gold standard
2. Discuss petro-dollar system
Changing global economy and pressure on dollar
Impact of de-dollarization

Negative:

transition challenges,
potential short-term instability, and
limited global acceptance of alternative currencies

Positives:

diversified risks
strengthened national currencies
increased monetary policy independence, and
reduced vulnerability to US sanctions

Way forward: It will take long time

Question #2.Examine the causes and consequences of currency depreciation in an economy. Discuss the measures that can be taken to mitigate its adverse effects.

Ans

A fall in the exchange rate is known as a depreciation in the exchange rate (or devaluation in a fixed exchange rate system). It means the currency is worth less compared to other countries.

Some of the leading causes of currency depreciation are:

Lower export revenues
A surge in imports
Reduced monetary policy interest rates
Central bank intervention
Currency sold by traders and speculators in the market

Impact of Depreciation:

Tends to increase the rate of economic growth and reduce unemployment.
Tends to benefit exporters, but makes imports more expensive.
Benefits the domestic tourist industry. It is more expensive to travel abroad and foreigners will find the UK more attractive.
Consumers likely to see higher prices – at least for imported goods.
Tends to cause inflation. This is because: