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:

Option 1 -> This sequence starts with demand curve shift, but the primary cause (increased demand for foreign services) should come first.

Option 2 -> This sequence places demand curve shift before the increase in demand for foreign services, which reverses the logical order.

Option 3 -> This sequence correctly shows: (B) increased demand for foreign services due to travel → (A) demand curve shifts right → (D) rupee value falls in terms of dollars → (C) depreciation of rupee. This follows proper cause-and-effect logic.

Option 4 -> This sequence starts with depreciation, which is actually the end result, not the starting point.

Hence, Option 3: (B), (A), (D), (C) -> When Indians travel internationally, they first need foreign currency for services abroad (B). This increased demand shifts the demand curve for foreign currency rightward (A). As a result, more rupees are needed to buy the same amount of foreign currency, meaning rupee's value falls against the dollar (D). This process is called depreciation of the domestic currency (C). The sequence follows the logical chain: cause → graphical representation → specific effect → general economic term. -> correct