Economy, Monetary Policy, UPSC PYQ

Consider the following statements:

1. Tight monetary policy of US Federal Reserve could lead to capital flight.
2. Capital flight may increase the interest cost of firms with existing External Commercial Borrowings
(ECBs).
3. Devaluation of domestic currency decreases the currency risk associated with ECBs.

Which of the statements given above are correct?

2 and 2 only

2 and 3 only

1 and 3 only

1, 2 and 4

In India, which one of the following is responsible for maintaining price stability by controlling
inflation?

Department of Consumer Affairs

Expenditure Management Commission

Financial Stability and Development Council

Reserve Bank of India

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