Consider the following statements 1 The sum total of all the foreign currencies an economy possesses...........

Economic Affairs Balance of Payments

Consider the following statements:

1. The sum total of all the foreign currencies an economy possesses at a particular time is its foreign currency assets/reserves.

2. Foreign exchange reserves act as the first line of defense for India in case of economic slowdown.

3. The foreign exchange reserves are managed by the Reserve Bank of India for the Indian government.

Which of the above statements is/are correct?

1&2 only

1&3 only

2&3 only

All the above

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Explanation:

FOREIGN CURRENCY ASSETS
The sum total of all the foreign currencies an economy possesses at a particular time is its foreign currency assets/reserves.
The total capacity of an economy to manage liquid foreign exchange is its foreign exchange (Forex) reserve.
This contains basically three components—the foreign currency assets, the total gold reserves and the total special drawing rights (SDRs) of an economy in the IMF.
The reserves are managed by the Reserve Bank of India for the Indian government and the main component is foreign currency assets.
Foreign exchange reserves act as the first line of defense for India in case of economic slowdown. Foreign exchange reserves facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.