Advertisements
Advertisements
Question
Why is the demand curve for foreign exchange negatively sloped?
Solution
Demand for foreign exchange has a negative sloping demand curve since the rate of foreign exchange inversely relates to demand for foreign exchange. Foreign goods get more expensive for domestic consumers as the value of the local currency depreciates; this lowers the demand of foreign exchange; conversely, when the domestic currency appreciates, foreign goods become cheaper for domestic consumers, so increasing the demand for foreign currency.
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.
Recently Government of India has doubled the import duty on gold. What impact is it likely to have on foreign exchange rate and how?
Explain the effect of appreciation of domestic currency on imports.
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
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 supply also rises. Explain why.
Answer the following question.
State any two factors responsible for the inflow of foreign currency.
Discuss briefly the concept of managed floating system of foreign exchange rate determination.
What is the relationship between supply of foreign exchange and exchange rate?
______ rate is the price of one currency in terms of another.
Suppose it takes 1.25 yen to buy a rupee, and the price level in Japan is 3 and the price level in India is 1.2 Calculate the real exchange rate between India and Japan (the price of Japanese goods in terms of Indian goods).
Identify which of the following statement is true?
Foreign exchange refers to:
Suppose the exchange rate was \[\ce{$}\]1 = ₹ 80 and later changed to \[\ce{$}\]1 = ₹ 92. What will be its effect on the following?
Export of technical knowledge by the USA to India
If the value of US Dollar increases continuously in terms of Yen, it will result in ______.
