Which of the following is a feature of the 'Financial Development' and growth literature?
A. Financial development always retards growth
B. Better-functioning financial systems can promote growth by improving the allocation of capital and reducing financing constraints
C. Only the size of the banking system matters and quality is irrelevant
D. Finance is completely neutral for real activity
Answer: Option B
Solution (By JKSSB Mock Tests)
A large body of research finds that financial development—deeper, more efficient and more inclusive financial systems—tends to raise long-run growth by relaxing credit constraints and improving resource allocation.
Explanation:
SDRs are international reserve assets that can be exchanged for freely usable currencies and used in transactions among IMF members and prescribed holders.
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