Arrange the following statements relating to appreciation of domestic currency in the correct sequence.
(A) The demand curve for foreign exchange shifts to the right of the original demand curve
(B) Due to some reason the exchange rate falls to 1$ = Rs. 70
(C) The initial exchange rate is 1$ = Rs. 75
(D) This increase the demand for foreign goods and services by Indians
Choose the correct answer from the options given below :
Arrange the following statements relating to appreciation of domestic currency in the correct sequence.
(A) The demand curve for foreign exchange shifts to the right of the original demand curve
(B) Due to some reason the exchange rate falls to 1$ = Rs. 70
(C) The initial exchange rate is 1$ = Rs. 75
(D) This increase the demand for foreign goods and services by Indians
Choose the correct answer from the options given below :
Solution
Starting with initial exchange rate 1 = Rs. 70 (B), meaning rupee appreciates. This makes foreign goods cheaper, increasing demand for foreign goods by Indians (D), which shifts demand curve for foreign exchange rightward (A). Hence (C), (B), (D), (A).
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