Macro

Balance of Payments

Easy

In order to promote exports in a fixed exchange rate system, the government can opt for-

Devaluation of domestic currency

Appreciation of domestic currency

Depreciation of domestic currency

Revaluation of domestic currency

✅ Correct Option: 1

Under a fixed exchange rate system, a deliberate lowering of the currency's official value by the government is called devaluation. It makes exports cheaper for foreigners and thus promotes exports. Depreciation refers to a fall in currency value under a flexible system, so devaluation is correct here.

2026: 31 May Shift 1

When the government increases the exchange rate of domestic currency in terms of foreign currency(by making domestic currency costlier year) in a fixed exchange rate system, that increase called:

2026: 11 May Shift 2

The Capital Account of Balance of Payments includes:

2025: 13 May Shift 1

Suppose an Indian manufacturer of steel acquires a steel manufacturing unit in Europe. This type of transactions are recorded in which of the following.

2025: 22 May Shift 2

When the income of domestic consumers increases, their spending will Increase and thus spending on imported goods is also likely to increase. This leads to ............... of domestic currency?

2025: 15 May Shift 1

Which of the following is a component of the capital account?

2025: 13 May Shift 2

Match List-I with List-II

List-I	List-II
(A) Current Account	(I) Receipts < Payments
(B) Capital Account	(II) Net Investment Income.
(C) Current Account Deficit	(III) Transfer Payment
(D) Trade in Services	(IV) Portfolio Investment

Choose the correct answer from the options given below:

In order to promote exports in a fixed exchange rate system, the government can opt for-

Solution

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