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Consider the following statements.
- In a floating exchange rate system, market forces determine the value of a currency.
- The demand for rupees in the forex market depends on foreign demand for Indian exports.
- Currency appreciation encourages a country’s export activity as its products and services become cheaper to buy.
Which of the above statements is/are correct?
- a)1, 2
- b)1, 3
- c)2, 3
- d)1, 2, 3
Correct answer is option 'A'. Can you explain this answer?
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Consider the following statements. In a floating exchange rate system,...
In the forex market, the supply of rupees is determined by the demand for imports and various foreign assets. So, if there is high demand to import oil, it can lead to an increase in the supply of rupees in the forex market and cause the rupee’s value to drop. The demand for rupees in the forex market, on the other hand, depends on foreign demand for Indian exports and other domestic assets. So, for instance, when there is great enthusiasm among foreign investors to invest in India, it can lead to an increase in the supply of dollars in the forex market which in turn causes the rupee’s value to rise against the dollar.
Appreciation Vs Depreciation:
- In a floating exchange rate system, market forces (based on demand and supply of a currency) determine the value of a currency.
- Currency Appreciation: It is an increase in the value of one currency in relation to another currency.
- Currencies appreciate against each other for a variety of reasons, including government policy, interest rates, trade balances and business cycles.
- Currency appreciation discourages a country’s export activity as its products and services become costlier to buy.
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Consider the following statements. In a floating exchange rate system,...
To import more goods and services.
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Consider the following statements. In a floating exchange rate system, market forces determine the value of a currency. The demand for rupees in the forex market depends on foreign demand for Indian exports. Currency appreciation encourages a country’s export activity as its products and services become cheaper to buy.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct answer is option 'A'. Can you explain this answer?
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Consider the following statements. In a floating exchange rate system, market forces determine the value of a currency. The demand for rupees in the forex market depends on foreign demand for Indian exports. Currency appreciation encourages a country’s export activity as its products and services become cheaper to buy.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct 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 Consider the following statements. In a floating exchange rate system, market forces determine the value of a currency. The demand for rupees in the forex market depends on foreign demand for Indian exports. Currency appreciation encourages a country’s export activity as its products and services become cheaper to buy.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct 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 Consider the following statements. In a floating exchange rate system, market forces determine the value of a currency. The demand for rupees in the forex market depends on foreign demand for Indian exports. Currency appreciation encourages a country’s export activity as its products and services become cheaper to buy.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct answer is option 'A'. Can you explain this answer?.
Solutions for Consider the following statements. In a floating exchange rate system, market forces determine the value of a currency. The demand for rupees in the forex market depends on foreign demand for Indian exports. Currency appreciation encourages a country’s export activity as its products and services become cheaper to buy.Which of the above statements is/are correct?a)1, 2b)1, 3c)2, 3d)1, 2, 3Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
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