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If exchange rate increases, this will make
- a)Domestic country's goods becomes cheaper to foreigners
- b)Domestic country's goods becomes cheaper to residents
- c)Domestic country's goods becomes dearer to foreigners
- d)Domestic country's goods becomes dearer to residents
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
If exchange rate increases, this will makea)Domestic countrys goods be...
Explanation:
An exchange rate is the value of one currency expressed in terms of another currency. When exchange rates increase, it means that the currency of a country gains value relative to the currency of another country. This has several implications for the economy of the country whose currency has gained value.
Effect on Domestic Country's Goods:
When exchange rates increase, it affects the prices of goods and services in the country. The effect of exchange rates on domestic goods depends on whether the goods are exported or sold domestically.
Effect on Goods for Export:
If a country's goods are primarily exported, an increase in exchange rates will make the country's goods more expensive for foreign buyers. This is because the foreign currency required to purchase the goods will now be more expensive relative to the domestic currency.
Effect on Goods Sold Domestically:
If a country's goods are primarily sold domestically, an increase in exchange rates will make the goods cheaper for domestic buyers. This is because the domestic currency has gained value relative to foreign currencies, making it easier for domestic buyers to purchase goods with their own currency.
Conclusion:
Therefore, when exchange rates increase, domestic country's goods become cheaper to foreigners as the foreign currency required to purchase the goods will now be more expensive relative to the domestic currency. On the other hand, domestic country's goods become dearer to residents as the domestic currency has gained value relative to foreign currencies, making it easier for domestic buyers to purchase goods with their own currency.
An exchange rate is the value of one currency expressed in terms of another currency. When exchange rates increase, it means that the currency of a country gains value relative to the currency of another country. This has several implications for the economy of the country whose currency has gained value.
Effect on Domestic Country's Goods:
When exchange rates increase, it affects the prices of goods and services in the country. The effect of exchange rates on domestic goods depends on whether the goods are exported or sold domestically.
Effect on Goods for Export:
If a country's goods are primarily exported, an increase in exchange rates will make the country's goods more expensive for foreign buyers. This is because the foreign currency required to purchase the goods will now be more expensive relative to the domestic currency.
Effect on Goods Sold Domestically:
If a country's goods are primarily sold domestically, an increase in exchange rates will make the goods cheaper for domestic buyers. This is because the domestic currency has gained value relative to foreign currencies, making it easier for domestic buyers to purchase goods with their own currency.
Conclusion:
Therefore, when exchange rates increase, domestic country's goods become cheaper to foreigners as the foreign currency required to purchase the goods will now be more expensive relative to the domestic currency. On the other hand, domestic country's goods become dearer to residents as the domestic currency has gained value relative to foreign currencies, making it easier for domestic buyers to purchase goods with their own currency.
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If exchange rate increases, this will makea)Domestic countrys goods becomes cheaper to foreignersb)Domestic countrys goods becomes cheaper to residentsc)Domestic countrys goods becomes dearer to foreignersd)Domestic countrys goods becomes dearer to residentsCorrect answer is option 'A'. Can you explain this answer?
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If exchange rate increases, this will makea)Domestic countrys goods becomes cheaper to foreignersb)Domestic countrys goods becomes cheaper to residentsc)Domestic countrys goods becomes dearer to foreignersd)Domestic countrys goods becomes dearer to residentsCorrect answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about If exchange rate increases, this will makea)Domestic countrys goods becomes cheaper to foreignersb)Domestic countrys goods becomes cheaper to residentsc)Domestic countrys goods becomes dearer to foreignersd)Domestic countrys goods becomes dearer to residentsCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If exchange rate increases, this will makea)Domestic countrys goods becomes cheaper to foreignersb)Domestic countrys goods becomes cheaper to residentsc)Domestic countrys goods becomes dearer to foreignersd)Domestic countrys goods becomes dearer to residentsCorrect answer is option 'A'. Can you explain this answer?.
If exchange rate increases, this will makea)Domestic countrys goods becomes cheaper to foreignersb)Domestic countrys goods becomes cheaper to residentsc)Domestic countrys goods becomes dearer to foreignersd)Domestic countrys goods becomes dearer to residentsCorrect answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about If exchange rate increases, this will makea)Domestic countrys goods becomes cheaper to foreignersb)Domestic countrys goods becomes cheaper to residentsc)Domestic countrys goods becomes dearer to foreignersd)Domestic countrys goods becomes dearer to residentsCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If exchange rate increases, this will makea)Domestic countrys goods becomes cheaper to foreignersb)Domestic countrys goods becomes cheaper to residentsc)Domestic countrys goods becomes dearer to foreignersd)Domestic countrys goods becomes dearer to residentsCorrect answer is option 'A'. Can you explain this answer?.
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