Question : Indian Rupee plunged to all time low of INR 85.10 against US dollar. How it will impact the import status of the country.
Option 1: Imports will increase
Option 2: Imports will decrease
Option 3: No change
Option 4: Either a or b
Correct Answer: Imports will decrease
Solution : The correct answer is (b) Imports will decrease
A depreciation in the Indian Rupee means that it takes more Rupees to purchase the same amount of foreign currency (in this case, the US dollar). As a result, the cost of importing goods and services from other countries becomes higher. This makes imports relatively more expensive, and therefore, it is expected that imports will decrease.
Question : What is the impact of a stronger domestic currency on a country's imports and exports?
Option 1: Increase in imports, decrease in exports
Option 2: Decrease in imports, increase in exports
Option 3: Increase in imports, increase in exports
Option 4: Decrease in imports, decrease in exports
Question : The value of US dollar $1 has come down from INR 85 to INR 84. It means that:
Option 1: Indian rupee has appreciated
Option 2: US dollar has depreciated
Option 3: Both (a) and (b)
Option 4: None
Question : Which of the following is not a major international reserve currency?
Option 1: US dollar
Option 2: Euro
Option 3: Japanese yen
Option 4: Indian rupee
Question : Depreciation of a country's currency can have a positive impact on its:
Option 1: Export-oriented industries.
Option 2: Import-dependent industries.
Option 3: Both export-oriented and import-dependent industries.
Option 4: Neither export-oriented nor import-dependent industries.
Question : It means with same amount of dollar more goods can be purchased from foreign country. Which effect of appreciation is highlighted here?
Option 1: Increase in imports
Option 2: Decrease in exports
Option 3: Decrease in the national income
Option 4: All of the above.
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