Which of the following is a characteristic of the 'Speculative Attack' models of currency crises?
A. Only current-account deficits cause crises
B. A fixed exchange rate may collapse suddenly when reserves reach a critical threshold
C. Crises occur only gradually
D. Reserves never matter
Answer: Option B
Solution (By JKSSB Mock Tests)
First-generation speculative-attack models show that an inconsistent policy mix (e.g., persistent money-financed deficits under a fixed exchange rate) leads to a sudden attack that exhausts reserves and forces abandonment of the peg.
Explanation:
Goods and Services Tax is a comprehensive indirect tax levied on the supply of goods and services, with a dual structure involving both the Centre and the States.
Explanation:
Disguised unemployment exists when the removal of some workers does not reduce total output, typically found in agriculture in developing countries.
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