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:
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:
Solution
✅ Correct Option: 1
When residents demand more foreign goods and services (A), the demand curve for foreign exchange shifts upward (B). This raises the price of foreign exchange (C), which means the domestic currency's value falls relative to the foreign currency (D). Order: (A), (B), (C), (D).
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