2016 · Q108
Which one of the following terms is used in Economics to denote a technique for avoiding a risk by making a counteracting transaction?
General KnowledgeIndian Economy
- ADumping
- BHedging
- CDiscounting
- DDeflating
Explanation
Hedging is the technique of reducing or eliminating risk by taking a counteracting position, for example a farmer selling futures to offset the risk of falling crop prices. Dumping is selling below cost abroad, discounting is present-valuing future sums, and deflating refers to reducing price levels. The risk-avoidance technique is hedging, option (B).