Class 12 Exam > Class 12 Questions > Choose the correct statement from given below...
Start Learning for Free
Choose the correct statement from given below.
- a)Balance of Trade is a component of capital account of Balance of Payments.
- b)Floating exchange rate is used to stabilise price of foreign currency.
- c)Increase in the supply of foreign exchange rate leads to fall in its price.
- d)Rise in exchange rate leads to revaluation of currency.
Correct answer is option 'C'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
Choose the correct statement from given below.a)Balance of Trade is a ...
Explanation:
Statement: Increase in the supply of foreign exchange rate leads to fall in its price.
This statement is correct. When the supply of a currency increases, its price falls. This is because an increase in supply leads to a surplus of the currency in the foreign exchange market. As a result, buyers have more options and can negotiate lower prices, causing the price of the currency to decrease.
Reasoning:
1. Supply and Demand: The foreign exchange market operates based on the principles of supply and demand. When the supply of a currency increases, its price decreases, and when the supply decreases, its price increases. This relationship is determined by the market forces of supply and demand.
2. Surplus and Shortage: An increase in the supply of foreign exchange means there is a surplus of that currency in the market. This surplus creates a situation where there is more supply than demand for the currency, leading to a decrease in its price.
3. Negotiation Power: When there is a surplus of a currency, buyers have more negotiation power. They can demand lower prices and sellers may be willing to sell at a lower price to get rid of the excess supply. This negotiation power of buyers further contributes to the decrease in the price of the currency.
4. Market Equilibrium: The price of a currency is determined by the interaction of supply and demand in the foreign exchange market. When the supply of a currency increases, it disrupts the equilibrium between supply and demand, leading to a decrease in the price of the currency. This decrease continues until a new equilibrium is established.
Conclusion:
In conclusion, an increase in the supply of foreign exchange leads to a fall in its price. This relationship is based on the principles of supply and demand in the foreign exchange market. When the supply exceeds demand, buyers have more negotiation power, leading to a decrease in the price of the currency.
Statement: Increase in the supply of foreign exchange rate leads to fall in its price.
This statement is correct. When the supply of a currency increases, its price falls. This is because an increase in supply leads to a surplus of the currency in the foreign exchange market. As a result, buyers have more options and can negotiate lower prices, causing the price of the currency to decrease.
Reasoning:
1. Supply and Demand: The foreign exchange market operates based on the principles of supply and demand. When the supply of a currency increases, its price decreases, and when the supply decreases, its price increases. This relationship is determined by the market forces of supply and demand.
2. Surplus and Shortage: An increase in the supply of foreign exchange means there is a surplus of that currency in the market. This surplus creates a situation where there is more supply than demand for the currency, leading to a decrease in its price.
3. Negotiation Power: When there is a surplus of a currency, buyers have more negotiation power. They can demand lower prices and sellers may be willing to sell at a lower price to get rid of the excess supply. This negotiation power of buyers further contributes to the decrease in the price of the currency.
4. Market Equilibrium: The price of a currency is determined by the interaction of supply and demand in the foreign exchange market. When the supply of a currency increases, it disrupts the equilibrium between supply and demand, leading to a decrease in the price of the currency. This decrease continues until a new equilibrium is established.
Conclusion:
In conclusion, an increase in the supply of foreign exchange leads to a fall in its price. This relationship is based on the principles of supply and demand in the foreign exchange market. When the supply exceeds demand, buyers have more negotiation power, leading to a decrease in the price of the currency.
Free Test
FREE
| Start Free Test |
Community Answer
Choose the correct statement from given below.a)Balance of Trade is a ...
When supply of foreign exchange increase it leads to inflow of foreign currency and recorded on credit side of BoP. Further, it leads to fall in exchange rate and improvement in BoT.
|
Explore Courses for Class 12 exam
|
|
Similar Class 12 Doubts
Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer?
Question Description
Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer?.
Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer?.
Solutions for Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for Class 12.
Download more important topics, notes, lectures and mock test series for Class 12 Exam by signing up for free.
Here you can find the meaning of Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer?, a detailed solution for Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Choose the correct statement from given below.a)Balance of Trade is a component of capital account of Balance of Payments.b)Floating exchange rate is used to stabilise price of foreign currency.c)Increase in the supply of foreign exchange rate leads to fall in its price.d)Rise in exchange rate leads to revaluation of currency.Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice Class 12 tests.
|
|
Explore Courses for Class 12 exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup