B. The negative impact of a natural resource boom on the manufacturing sector through currency appreciation
C. Only the impact of oil prices on inflation
D. The positive impact of resource discovery on all sectors
Answer: Option B
Solution (By JKSSB Mock Tests)
Dutch Disease describes the phenomenon whereby a boom in the natural resource sector leads to real exchange rate appreciation, making the manufacturing and other tradable sectors less competitive.
Explanation:
Under a managed floating system, the exchange rate is primarily determined by market forces, but the central bank intervenes occasionally to prevent excessive volatility.
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