Consider the following 1 Depreciation of domestic currency 2 Extension of interest subvention scheme...........

Economic Affairs Balance of Payments

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Consider the following:

1.Depreciation of domestic currency.

2.Extension of interest subvention scheme to export sector.

3.Adopting policies which attract greater FDI.

How many of the above action/actions can help in reducing the current account deficit?

Only One

Only Two

All Three

None

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Explanation:

Depreciation of domestic currency: When a country's domestic currency depreciates, its exports become more competitive in the international market, potentially leading to an increase in exports. This can help in reducing the current account deficit by boosting the trade balance.

Extension of interest subvention scheme to the export sector: Interest subvention schemes can reduce the cost of borrowing for exporters, making their products more competitive in the global market. This can contribute to an increase in exports, helping to reduce the current account deficit.

Adopting policies that attract greater Foreign Direct Investment (FDI): FDI can bring in capital and technology, contributing to economic growth. It can also have a positive impact on the current account by providing a stable source of financing.

Therefore, all three actions (1, 2, and 3) can potentially help in reducing the current account deficit.