Question : Due to India’s Make in India campaign many MNC’s are shifting their investments to INDIA. How will impact the exchange rate?
Option 1: Demand of Forex will increase
Option 2: Supply of foreign will increase
Option 3: Depreciation of foreign exchange
Option 4: No affect
Correct Answer:
Supply of foreign will increase
Solution : The correct answer is (b) Supply of foreign exchange will increase
With multinational companies shifting their investments to India, there will be an inflow of foreign currency into the country. This increased foreign investment will lead to an increase in the supply of foreign exchange in the Indian market.
The Make in India campaign is aimed at promoting domestic manufacturing and attracting foreign direct investment (FDI). When MNCs invest in India, they bring in foreign currency, which increases the supply of foreign exchange available in the country. As a result, the correct answer is (b) Supply of foreign exchange will increase.
