Question : Selling of securities by foreign institutional investors in Indian capital market with lead to fall in the _______ of foreign currency in the market. The situation might lead to excess _____ of foreign currency at prevailing foreign exchange rate.
Option 1: Demand, demand
Option 2: Supply, supply
Option 3: Demand, supply
Option 4: Supply, demand
Correct Answer: Demand, demand
Solution : Selling of securities by foreign institutional investors in Indian capital market with lead to fall in the supply of foreign currency in the market. The situation might lead to excess demand of foreign currency at prevailing foreign exchange rate. Hence Option A is correct.
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
Question : The Indian government banned import of cars with a view to promote domestic manufacturing and cut imports of batteries. How this will impact demand of foreign currency?
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 : It refers to the rate at which currency is exchanged for others.
Question : Which of the following steps should taken by the central bank if there is excessive rise in the foreign exchange rate?
Option 1: Supply foreign exchange from its stock
Option 2: Demand more of other foreign exchange
Option 3: Not intervene in the market as exchange rate is determined by the market forces
Option 4: Help central government to stabilize foreign exchange rate
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