Many a times we read in the newspapers that when Foreign Capital is allowed to enter the country freely, it can affect the economy adversely. Which among the following is a correct reason for the above assumption?
[A] It affects the balance of payments of the country by adversely affecting the Current Account
[B] It poses risks to the value of the country’s currency as well as management of local liquidity
[C] The foreign capital earns profit in the country which is repatriated
[D] The Balance of Trade of the country is badly affected by Foreign Capital Inflows
Show Answer
Correct Answer: B [It poses risks to the value of the country’s currency as well as management of local liquidity]
