Which of the following policies help to raise interest rate unambiguously and thereby lead to appreciation of currency?
- A. Expansionary fiscal and monetary policy
- B. Contractionary fiscal and monetary policy
- C. Contractionary fiscal policy and expansionary monetary policy
- D. Contractionary monetary policy and expansionary fiscal policy ✓
Correct Answer: D. Contractionary monetary policy and expansionary fiscal policy
Explanation
A contractionary monetary policy directly raises interest rates by reducing the money supply. Concurrently, an expansionary fiscal policy (increased government borrowing) increases demand for money, also pushing interest rates up. Higher interest rates attract foreign capital, appreciating the currency.
Related questions on Economics
- Which one among the following pairs of type of firm and feature is <strong>NOT</strong> correctly matched?
- Union Budget 2025 increased the Sectoral cap of FDI to 100 per cent from 74 per cent for:
- The practice of reducing the size of a product while maintaining its sticker price is called:
- Consider the following statements about Union Government's Expenditure on revenue account and effective capital expenditure: 1. Effective ca...
- Which one among the following statements about the Districts as Export Hubs (DEH) in India is <strong>NOT</strong> correct?