Consider the following statements 1 Foreign Direct Investment FDIs creates a multiplier effect in th...........

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Consider the following statements:

1.Foreign Direct Investment (FDIs) creates a multiplier effect in the economy.

2.Foreign Direct Investments are more volatile in nature than Foreign Institutional Investments (FIIs).

3.In the past two decades the cross border investment flows has been rising sharply.

Which of the statements given above is/are correct?

1 and 2 only

1 and 3 only

3 only

2 and 3

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Explanation:

1 and 3 only

Foreign Direct Investment (FDI) creates a multiplier effect in the economy: This statement is correct. FDI not only brings in capital but also contributes to job creation, infrastructure development, technology transfer, and overall economic growth, thereby generating multiplier effects in the economy.

Foreign Direct Investments are more volatile in nature than Foreign Institutional Investments (FIIs): This statement is incorrect. Generally, FIIs tend to be more volatile compared to FDIs. FIIs involve investment in securities such as stocks and bonds, which can be quickly bought and sold based on market conditions. On the other hand, FDIs involve long-term investments in physical assets and infrastructure, making them relatively less volatile.

In the past two decades, cross-border investment flows have been rising sharply: This statement is correct. Over the past two decades, globalization and liberalization have facilitated increased cross-border investment flows, including both FDIs and FIIs, contributing to greater integration of economies worldwide.