Question : Keeping other factors constant, when the price of foreign currency rises, national income is:
Option 1: Might fall
Option 2: Might increase
Option 3: Both a and b
Option 4: Not affected
Correct Answer: Might increase
Solution : The correct answer is (b) Might increase.
When the price of foreign currency rises, it means that the domestic currency depreciates or loses value relative to the foreign currency. This can have several effects on the national income of a country. On one hand, it can make domestic goods relatively cheaper for foreign buyers, potentially increasing exports and boosting national income. On the other hand, it can make imported goods relatively more expensive, potentially reducing imports and stimulating domestic production, which can also contribute to an increase in national income. However, the overall impact on national income will depend on various factors, including the structure of the economy, the elasticity of demand for exports and imports, and other macroeconomic conditions. Therefore, the correct answer is that national income "might increase" when the price of foreign currency rises, as it depends on the specific circumstances and dynamics of the economy.
Question : Relationship of APC and APS with National Income can be represented as:
Option 1: Both APC and APS fall with increase in National Income
Option 2: Both APC and APS rise with increase in National Income
Option 3: APS fall, while APC rises with increase in National Income
Option 4: APC falls, while APS rises with increase in National Income
Question : For an inferior good , demand falls when
Option 1: Price rises .
Option 2: Income rises.
Option 3: Price fall.
Option 4: Income fall.
Question : Which of the following statements are true?
Option 1: 1,2&3
Option 2: 2,3&4
Option 3: 1,3&4
Option 4: 1,2,3&4
Question : ________, shows that unit price of foreign currency has increase i.e., domestic currency has depreciated.
Option 1: Increase in demand
Option 2: Decrease in demand
Option 3: Increase in supply
Option 4: Decrease in supply
Question : The Indian government banned import of fans with a view to promote domestic manufacturing and cut imports of spices. How this will impact demand of foreign currency?
Option 1: Demand for foreign currency will fall
Option 2: Demand for foreign currency will rise
Option 3: Supply for foreign currency will fall
Option 4: Supply for foreign currency will rise
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