Macro

Balance of Payments

Easy

Devaluation of domestic currency will make :

Imports and Exports both become expensive

Imports become expensive and Exports become cheaper

Imports become cheaper and Exports become expensive

Imports and Exports both become cheaper

✅ Correct Option: 2

Devaluation lowers the external value of the domestic currency. Foreigners need less of their currency to buy domestic goods, so exports become cheaper abroad. Domestic residents need more domestic currency to buy foreign goods, so imports become expensive.

2023: 28 May Shift 2

Match List - I with List - II.

List - I | List - II

(A) Flexible exchange rate | (I) Market forces

(B) Devaluation | (II) Pegged exchange rate

(D) Depreciation | (IV) Government

Choose the correct answer from the options given below :

2025: 22 May Shift 1

Exchange rate determined by the market forces of demand and supply is also known as...

2023: 11 June Shift 3

When autonomous receipts are less than autonomous payments. The balance of payments is in :

2023: 20 June Shift 1

Exchange Rate is the price of a currency expressed in terms of.

2025: 22 May Shift 1

For example, there is an increase in international travel by Indians. What will be the effect on the domestic currency?

(A). Demand curve shifts upward and right to the original demand curve.

(B). Demand for foreign goods and services increases.

(C). Depreciation of domestic currency (rupees) in terms of foreign currency (dollars).

(D). The value of rupees in terms of dollars has fallen and value of dollar in terms of rupees has risen.

Choose the correct answer from the options given below:

2025: 13 May Shift 2

In an economy, to control a high balance of payment problem if government decided to reduce its currency value against globally accepted foreign currency, this process this known as:

Devaluation of domestic currency will make :

Solution

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