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.
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.
Depreciation of a country's currency can indeed help boost its export-oriented industries. The Reason provided correctly explains that a weaker currency makes a country's exports more affordable and competitive in the global market. When a country's currency depreciates (decreases in value) relative to other currencies, its exports become relatively cheaper for foreign buyers. This can lead to an increase in export demand, as foreign buyers find the country's goods and services more affordable compared to those of other countries. The competitiveness of the country's exports improves, which can benefit its export-oriented industries.
Therefore, both the Assertion and Reason are true, and the Reason provides a correct explanation for why depreciation of a country's currency can help boost its export-oriented industries.
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: 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.
Question : Assertion: A depreciating currency can help boost exports.
Reason: A lower currency value makes exports cheaper for foreign buyers, increasing their demand.
Option 1: Both Assertion and Reason are true and correct explanation
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: 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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