Assertion (A): A rise in foreign investment in India adds to the supply of foreign exchange.
Reason (R): Foreign investment is recorded in the current account.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

A is true: investors bring in dollars and convert them into rupees.
R is false: foreign investment is a capital account item.

Concept: Investment inflows
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe capital account

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Ten questions from Balance of Payments, at your own pace.

Assertion (A): A rise in foreign investment in India adds to the supply of foreign exchange.Reason (R): Foreign investment is recorded in the current account.

Explanation

Assertion (A): A rise in foreign investment in India adds to the supply of foreign exchange.
Reason (R): Foreign investment is recorded in the current account.