Question : Assertion: A depreciating currency can help boost exports.
Reason: A lower currency value makes exports cheaper for foreign buyers, increasing their demand.
Option 1: Both Assertion and Reason are true and correct explanation
Option 2: Both Assertion and Reason are true and incorrect explanation
Option 3: Assertion is true but Reason is false
Option 4: Assertion is false but Reason is true
Correct Answer: Both Assertion and Reason are true and correct explanation
Solution : The correct answer is (a) Both the Assertion and the Reason are true and provide a correct explanation.
The Assertion states that a depreciating currency can help boost exports, which is true. When a country's currency depreciates, it means that the value of the currency has decreased relative to other currencies. This makes the country's exports relatively cheaper for foreign buyers. As a result, foreign buyers may find the exports more affordable and may increase their demand for them, leading to a boost in export volumes.
The Reason states that a lower currency value makes exports cheaper for foreign buyers, increasing their demand, which is also true and supports the Assertion. When the currency depreciates, it takes fewer units of foreign currency to purchase a unit of the domestic currency. This effectively reduces the price of exports in foreign currency terms, making them more attractive and affordable to foreign buyers.
Therefore, Both Assertion and Reason are true and provide a correct explanation.
