CUET Economics 2025 27 May Shift 2 PYQs

The Reserve Bank sells foreign exchange when there is a deficit. This move of RBI is known by which of the following?

1. Official reserve sale.
2. Balance of payments deficit.
3. Balance of payments surplus.
4. Balance of trade.

Arrange the following steps in correct order with respect to change in exchange rate:

(A) Demand for foreign goods and services increases.

(B) It leads to a shift in the demand curve upward.

(C) That resulted in an increase in prices.

(D) The value of currency will fall in respect of foreign currency.

Choose the correct answer from the options given below:

Central banks intervene to buy and sell foreign currencies in an attempt to moderate exchange rate movements whenever they feel that such actions are appropriate. What is this move called?