Question : Increasing imports by a nation raises_____________ of foreign exchange.
Option 1: Supply
Option 2: Demand
Option 3: Both a and b
Option 4: None
Correct Answer: Demand
Solution : The correct answer is (b) Demand.
Increasing imports by a nation raises the demand for foreign exchange. When a country imports goods or services from another country, it needs to pay in the currency of the exporting country. As a result, the demand for foreign currency increases as the importing country needs more foreign currency to make payments for its increased imports. This higher demand for foreign exchange is driven by the increased import activity of the nation.
Question : It is determined by forces of demand and supply.
Option 1: Foreign exchange
Option 2: Foreign exchange market
Option 3: Foreign exchange rate
Option 4: None of the above.
Question : A ________ exchange rate is determined by the forces of supply and demand in the foreign exchange market.
Option 1: fixed
Option 2: floating
Option 3: managed
Option 4: pegged
Question : Equilibrium rate of exchange is determined by:
Option 1: Interception point of demand
Option 2: Interception point of supply
Option 3: Intersection point of demand and supply of foreign currency
Option 4: Either a or b
Question : How can RBI help in bringing down the foreign exchange rate which is very high?
Option 1: Buying foreign exchange from market
Option 2: Selling foreign exchange from its reserves
Option 3: Increasing money supply in the economy
Question : Which of the following leads to increase in supply of foreign exchange
Option 1: Exports of visible and invisible
Option 2: Imports of visible and invisible
Option 3: Remittances to abroad
Option 4: foreign visits by Indians
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