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?
Option 1: Demand for foreign currency will fall
Option 2: Demand for foreign currency will rise
Option 3: Supply for foreign currency will fall
Option 4: Supply for foreign currency will rise
Correct Answer: Demand for foreign currency will fall
Solution : This will reduce the demand of foreign exchange due to decrease in imports. Hence Option A is correct.
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 : 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.
Question : ________, shows that unit price of foreign currency has increase i.e., domestic currency has depreciated.
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