CUET Economics 2025 28 May Shift 2 PYQs

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.

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Arrange the following statements in correct order in the context of flexible exchange rate system.

(A) When income increases, consumer spending increases.

(B) Shift in demand curve for foreign exchange towards right.

(C) Spending on imported goods increases.

(D) Depreciation of domestic currency with respect to foreign currency.

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Choose the correct statements from the following in respect of exchange rate system.

(A) Floating Exchange Rate exchange rate is determined by the market forces of demand and supply.

(B) In a fixed exchange rate system, making domestic currency cheaper is called Devaluation.

(C) Increase in exchange rate implies that the price of foreign currency has increased and is called depreciation.

(D) Exchange rates between any two currencies adjust to reflect differences in the price levels in the two countries.

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