Question : Assertion: Appreciation of a country's currency can have a negative impact on its tourism industry.
Reason: A stronger currency makes traveling to the country more expensive for foreign tourists.
Option 1:
Both Assertion and Reason are true and correct explanation
Option 2: Both Assertion and Reason are true and incorrect explanation
Option 3: Assertion is true but Reason is false
Option 4: Assertion is false but Reason is true
Correct Answer:
Solution : The correct answer is (a) Both Assertion and Reason are true and correct explanation.
Appreciation of a country's currency can indeed have a negative impact on its tourism industry. When a country's currency appreciates (increases in value) against other currencies, it makes traveling to that country more expensive for foreign tourists. The Reason provided correctly explains that a stronger currency increases the cost of travel, as foreign tourists need to exchange more of their own currency to get the same amount of the stronger currency. This can lead to a decrease in the number of foreign tourists visiting the country, as it becomes relatively more expensive for them.
Therefore, both the Assertion and Reason are true, and the Reason provides a correct explanation for why appreciation of a country's currency can have a negative impact on its tourism industry.
Question : Assertion: Depreciation of a country's currency can help boost its export-oriented industries.
Reason: A weaker currency makes a country's exports more affordable and competitive in the global market.
Question : Assertion: Appreciation and Revaluation of Domestic Currency with respect to foreign currency are one and the same thing.
Reason: Appreciation and Revaluation of domestic currency make the domestic goods relatively expensive. As a result, decrease in exports and increase in imports of the nation are observed.
Question : Assertion: Devaluation of Domestic currency refers to rise in National Income of domestic country.
Reason: Devaluation of Domestic currency refers to reduction in the value of domestic currency with respect to foreign currency, under fixed exchange rate system.
Question : Assertion: Fluctuations in foreign exchange rates can impact a country's balance of trade.
Reason: A change in the exchange rate affects the competitiveness of a country's exports and imports.
Question : Assertion: Central banks play a significant role in managing and influencing foreign exchange rates.
Reason: Central banks can intervene in the foreign exchange market to stabilize or manipulate their country's currency value.
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