Advertisements
Advertisements
Question
Suppose the exchange rate was \[\ce{$}\]1 = ₹ 80 and later changed to \[\ce{$}\]1 = ₹ 92. What will be its effect on the following?
Import of gold jewellery by the USA from India
Solution
The depreciation of the domestic currency (from ₹ 80 to ₹ 92 per dollar) reduces the cost of imports from India for American buyers in USD. As a result, the USA may expand its imports of gold jewellery from India.
APPEARS IN
RELATED QUESTIONS
Foreign exchange transactions dependent on other foreign exchange transactions are called ______.
(a) In which sub-account and on which side of balance of payments account will foreign investments in India be recorded? Given reasons.
(b)What will be the effect of foreign investments in India on exchange rate? Explain.
Give meaning of managed floating exchange rate.
Other things remaining the same, when in a country the market price of the foreign currency falls, national income is likely (Choose the correct alternative)
a. to rise
b. to fall
c. to rise or to fall
d. to remain unaffected
Other things remaining the same, when the foreign currency becomes cheaper, the effect on national income is likely to be : (Choose the correct alternative)
a. Positive
b. Negative
c. Positive and negative both
d. No effect
What is 'devaluation'?
How does giving incentives for the exports influence foreign exchange rate? Explain
The foreign exchange rate in India is on the rise recently. What impact is it likely to have on exports and how?
What is 'appreciation' of domestic currency? What is its likely effect on exports and how?
Give the meaning of ‘foreign exchange’ and ‘foreign exchange rate’. Giving reason, explain the relation between foreign exchange rate and demand for foreign exchange.
When price of a foreign currency rises, its demand falls. Explain why.
Answer the following question.
State any two factors responsible for the inflow of foreign currency.
How is the rate of exchange determined in a flexible exchange rate system?
______ rate is the price of one currency in terms of another.
______ rate is the ratio of foreign prices to domestic prices.
______ is a scheme under which government can intervene to vary the exchange rate when the situation demands so.
Foreign exchange refers to:
Why is the demand curve for foreign exchange negatively sloped?
State whether the following items will be included in the estimation of National Income or not: Give a reason for your answer.
Profit earned by State Bank of India in a foreign country.
