12th Class Economics Foreign Exchange Rate Question Bank MCQs - Foreign Exchange Rate

  • question_answer
    What will be the most likely impact on the national income when in a country the price of foreign currency rises, keeping other things unchanged?

    A) Likely to rise

    B) Likely to fall

    C) Likely to rise and fall both

    D) Not affected

    Correct Answer: A

    Solution :

    Rise in exchange rate leads to depreciation of domestic currency. Depreciation of currency encourages exports and inflow of foreign exchange. This process is likely to have a positive impact on the national income of the country.


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