Question : Selling of securities by foreign institutional investors in Indian capital market with lead to fall in the _______ of foreign currency in the market. The situation might lead to excess _____ of foreign currency at prevailing foreign exchange rate.
Option 1: Demand, demand
Option 2: Supply, supply
Option 3: Demand, supply
Option 4: Supply, demand
Correct Answer: Demand, demand
Solution : Selling of securities by foreign institutional investors in Indian capital market with lead to fall in the supply of foreign currency in the market. The situation might lead to excess demand of foreign currency at prevailing foreign exchange rate. Hence Option A is correct.
Question : The Indian government banned import of cars with a view to promote domestic manufacturing and cut imports of batteries. How this will impact demand of foreign currency?
Question : The Indian government banned import of fans with a view to promote domestic manufacturing and cut imports of spices. How this will impact demand of foreign currency?
Question : It is determined by forces of demand and supply.
Question : It refers to the rate at which currency is exchanged for others.
Question : Which of the following steps should taken by the central bank if there is excessive rise in the foreign exchange rate?
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