Home › CBSE Class 12 (Arts) › Economics › Open Economy Macroeconomics › Why does demand for foreign exchange fall when i…
Why does demand for foreign exchange fall when its price rises?
AExports become cheaper
BImports become costlier
CGifts become illegal
DReserves rise by law
Answer & Solution
Correct answer: B. Imports become costlier
A dearer dollar raises the rupee cost of foreign goods, so imports and hence demand for dollars decline.
Related questions
Which of these is part of the current account as per the BoP definition?If outflows exceed inflows, all else equal, a currency is likely to come under pressure toAfter Bretton Woods, the principal de facto reserve currency has been theA stronger currency tends to make a nation's exportsWho developed the theory of comparative advantage?Which 1997 event led emerging economies to rethink reliance on free markets?A BoP crisis occurs when a nation cannot pay forThe Bretton Woods system came to an end between which years?