Question : Assertion: A depreciating exchange rate benefits a country's tourism industry.
Reason: A weaker domestic currency makes traveling to the country more affordable for foreign tourists.
Option 1: True, as a weaker currency reduces the cost of accommodation and travel expenses.
Option 2: True, only if the country has a strong domestic tourism industry.
Option 3: False, as a depreciating exchange rate discourages foreign tourists.
Option 4: False, as exchange rates have no impact on the tourism industry.
Correct Answer: True, as a weaker currency reduces the cost of accommodation and travel expenses.
Solution : The correct answer is (a) True, as a weaker currency reduces the cost of accommodation and travel expenses.
A depreciating exchange rate, which means a weaker domestic currency, can benefit a country's tourism industry. The reason behind this is that a weaker currency makes traveling to the country more affordable for foreign tourists. When a country's currency depreciates, it takes fewer units of foreign currency to exchange for the domestic currency. This reduces the cost of accommodation, transportation, and other expenses for foreign tourists, making the country a more attractive and affordable destination. As a result, a depreciating exchange rate can encourage an increase in tourist arrivals and support the growth of the tourism industry.
Question : A country's central bank can intervene in the foreign exchange market to influence the value of its currency. This is known as ________.
Option 1: exchange rate targeting
Option 2: currency manipulation
Option 3: foreign exchange intervention
Option 4: exchange rate pegging
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 : What is the meaning of exchange rate?
Option 1: Quantum of domestic currency needed to pay for foreign currency
Option 2: Quantum of foreign currency needed to pay for another foreign currency
Option 3: Rate at which foreign currency is bought and sold
Option 4: All of these
Question : What is the term used to describe the practice of pegging a currency to a more stable foreign currency?
Option 1: Fixed exchange rate
Option 2: Flexible exchange rate
Option 3: Managed float exchange rate
Option 4: Currency board arrangement
Question : What is the term used to describe the rate at which a central bank buys or sells its own currency in the foreign exchange market?
Option 1: Spot exchange rate
Option 2: Nominal exchange rate
Option 3: Intervention exchange rate
Option 4: Forward exchange rate
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