Question : Assertion: Appreciation of a country's currency can lead to a decrease in its inflation rate.

Reason: A stronger currency reduces the cost of imported goods, thereby lowering inflationary pressures.

Option 1: True, as imported goods become relatively cheaper, reducing inflationary pressures.
 

Option 2: True, only if the country has a high dependence on imported goods.
  

Option 3: False, as currency appreciation has no impact on a country's inflation rate.

Option 4: False, as currency appreciation leads to higher inflation due to increased purchasing power.

Question : A decrease in a country's exports is likely to result in:

Option 1: Appreciation of its currency
 

Option 2: Depreciation of its currency
 

Option 3: No impact on its currency

Option 4: A fixed exchange rate

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 : 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.

Question : A recession is characterized by:

Option 1: High inflation and high unemployment
   

Option 2: Low inflation and high unemployment
 

Option 3: High inflation and low unemployment

Option 4: Low inflation and low unemployment