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Assertion (A): Demand for foreign exchange and exchange rate moves in the same direction.
Reason (R):  When exchange rate rises domestic goods becomes cheaper in international market.
Alternatives
  • a)
    Assertion (A) is true and Reason (R) is a correct reason of Assertion (A).
  • b)
    Assertion (A) is true and Reason (R) is not a correct reason of Assertion (A)
  • c)
    Assertion (A) is false, but Reason (R) is true
  • d)
    Both are false
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Assertion (A): Demand for foreign exchange and exchange rate moves in ...
Explanation:
Foreign exchange denotes the currency of one country that is converted into the currency of another country. The exchange rate is the price of one currency in terms of another currency.

The assertion is that demand for foreign exchange and exchange rate moves in the same direction. Let's analyze this assertion and the reason given for it.


Reasoning:
The Reason given is that when the exchange rate rises, domestic goods become cheaper in the international market. This statement is true because when the exchange rate of a country rises, its currency becomes stronger, and the prices of goods and services in that country become relatively more expensive compared to other countries. Therefore, foreign consumers will demand fewer goods and services from that country, and the demand for foreign exchange will decrease.

However, the assertion that demand for foreign exchange and exchange rate moves in the same direction is false. This is because demand for foreign exchange depends on many factors such as imports, exports, capital flows, and tourism, among others. These factors can cause the demand for foreign exchange to increase or decrease, even if the exchange rate remains constant.


Conclusion:
In conclusion, while the reason given for the assertion is true, the assertion itself is false. Therefore, the correct answer is option 'C', which states that Assertion (A) is false, but Reason (R) is true.
Free Test
Community Answer
Assertion (A): Demand for foreign exchange and exchange rate moves in ...
Demand for foreign exchange and exchange rate are inversely proportional, i.e., with increase in one other fall and vice-versa.
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Assertion (A): Demand for foreign exchange and exchange rate moves in the same direction.Reason (R): When exchange rate rises domestic goods becomes cheaper in international market.Alternativesa)Assertion (A) is true and Reason (R) is a correct reason of Assertion (A).b)Assertion (A) is true and Reason (R) is not a correct reason of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Both are falseCorrect answer is option 'C'. Can you explain this answer?
Question Description
Assertion (A): Demand for foreign exchange and exchange rate moves in the same direction.Reason (R): When exchange rate rises domestic goods becomes cheaper in international market.Alternativesa)Assertion (A) is true and Reason (R) is a correct reason of Assertion (A).b)Assertion (A) is true and Reason (R) is not a correct reason of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Both are falseCorrect 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 Assertion (A): Demand for foreign exchange and exchange rate moves in the same direction.Reason (R): When exchange rate rises domestic goods becomes cheaper in international market.Alternativesa)Assertion (A) is true and Reason (R) is a correct reason of Assertion (A).b)Assertion (A) is true and Reason (R) is not a correct reason of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Both are falseCorrect 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 Assertion (A): Demand for foreign exchange and exchange rate moves in the same direction.Reason (R): When exchange rate rises domestic goods becomes cheaper in international market.Alternativesa)Assertion (A) is true and Reason (R) is a correct reason of Assertion (A).b)Assertion (A) is true and Reason (R) is not a correct reason of Assertion (A)c)Assertion (A) is false, but Reason (R) is trued)Both are falseCorrect answer is option 'C'. Can you explain this answer?.
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