Question : An increase in the nominal exchange rate can be caused by:

Option 1: Lower interest rates in the domestic economy.
 

Option 2: Higher inflation rates in the domestic economy.
 

Option 3: Lower inflation rates in the domestic economy.

Option 4: Government intervention in the foreign exchange market.

Question : The Indian Government launched Incredible India campaign to promote tourism in India? How it will impact the exchange rate?

Option 1: Appreciation of domestic currency
 

Option 2: Outflow of foreign exchange
 

Option 3: Depreciation of domestic currency

Option 4: None

Question : A decrease in interest rates in a country is likely to result in:

Option 1: Appreciation of the domestic currency
 

Option 2: Depreciation of the domestic currency
 

Option 3: No impact on the exchange rate

Option 4: Unpredictable fluctuations in the exchange rate

Question : A decrease in the real exchange rate implies:

Option 1: Increased competitiveness of domestic goods in the international market.
 

Option 2: Reduced competitiveness of domestic goods in the international market.
 

Option 3: Increased inflation in the domestic economy.

Option 4: Reduced inflation in the domestic economy.

Question : When domestic currency gains value in relation to a foreign currency in the international market, it is termed as a situation of:

Option 1: Currency Depreciation
 

Option 2: Currency Appreciation
 

Option 3: Currency Devaluation

Option 4: None