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Determine the term - hot money
A large 'hot money' inflow shifts the demand curve for currency to the right, leading to exchange rate rising and to an overvalued exchange rate in terms of trading competitiveness of the country's exports. The current account of balance of payments is then about to deteriorate. If there is a shortage to start with, the deficit will grow larger. A large 'hot money' outflow will lead to opposite result.
Liberalisation and Changing Sources of FDI: European countries had been major sources of FDI inflows to India until 1990. However, their relative importance declined in the
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unplandned change in inventory are coutned as investment spending by firms
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