Question : Which of the following is a potential drawback of currency appreciation for an export-driven economy?

Option 1: Increased purchasing power of domestic consumers.
 

Option 2: Decreased competitiveness of exported goods.
 

Option 3: Higher import costs.

Option 4: All of the above.

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 : A decrease in the real exchange rate implies:

Option 1: Increased competitiveness of domestic goods in the international market.
 

Option 2: Reduced competitiveness of domestic goods in the international market.
 

Option 3: Increased inflation in the domestic economy.

Option 4: Reduced inflation in the domestic economy.

Question : An increase in the nominal exchange rate indicates:

Option 1: Appreciation of the domestic currency.

Option 2: Depreciation of the domestic currency.
 

Option 3: No change in the value of the domestic currency.

Option 4: Inflation in the domestic economy.

Question : When domestic currency gains value in relation to a foreign currency in the international market, it is termed as a situation of:

Option 1: Currency Depreciation
 

Option 2: Currency Appreciation
 

Option 3: Currency Devaluation

Option 4: None