"GST has improved India's ranking in terms of ease of doing business. The introduction of GST has attracted foreign investors in large numbers."

What will be the sequential impact of the above on the exchange rate of the rupee in the international money market?

(A) The supply curve of foreign exchange shifts to the right.

(B) The exchange rate starts falling.

(C) There is an appreciation of the rupee on the international money market.

(D) An increase in foreign investment increases the supply of foreign exchange.

Choose the correct answer from the options given below:

Option 1 -> This sequence starts with supply curve shift, but logically foreign investment must come first to cause the shift.

Option 2 -> This sequence incorrectly places appreciation before exchange rate falling and supply curve shift.

Option 3 -> This follows the correct economic cause-effect chain: investment → supply increase → curve shift → rate fall → appreciation.

Option 4 -> This sequence illogically starts with appreciation before foreign investment increases supply.

Hence, Option 3: (D), (A), (B), (C) -> The correct sequential impact is: First, foreign investment increases the supply of foreign exchange (D). This causes the supply curve to shift rightward (A). With increased supply, the price of foreign currency falls, meaning the exchange rate falls (B). A falling exchange rate means fewer rupees are needed to buy foreign currency, indicating rupee appreciation (C). This is the logical cause-and-effect chain in foreign exchange markets. -> correct