Question : When the Government wants to strengthen the rupee, it ________ foreign currency and ______ domestic currency.
Option 1: Buys, Sells
Option 2: Sells, Sells
Option 3: Sells, Buys
Option 4: Buys, Buys
Correct Answer: Sells, Buys
Solution : The correct answer is (c) Sells, Buys.
When the government wants to strengthen the rupee, it typically follows the approach of selling foreign currency and buying domestic currency.