Page 1 - HA- Foreign Exchange Rate

HOME ASSIGNMENT

CLASS-XII

Macroeconomics

Chapter-11-Foreign Exchange Rate

Question (Very short answer type questions-1 mark) Marks
No

1. 1.------------ Refers to a system in which foreign exchange rate is 1
determined by market forces and central bank influences the exchange
rate through intervention in the foreign exchange market.
a) Fixed Exchange Rate
b) Flexible Exchange Rate
c) Managed Floating
d) Both a) and b)
2. 2. Supply curve of foreign exchange: 1
a) Horizontal straight line parallel to X axis
b) Slopes downward
c) Vertical straight line parallel to Y axis
d) Slopes upward
3. Flexible exchange rate is also known as: 1
a) Dirty floating
b) Floating Exchange rate
c) Pegged Exchange rate
d) Both b) and c)
4. State whether True or False 1
‘Devaluation and depreciation of currency are one and same thing.

5. Define Foreign exchange rate. 1

6. State whether True or False 1
‘Flexible exchange rate is determined by market forces of demand and
supply.’

7 Give the reason of supply curve of foreign exchange slopes upward? 1
8 The price of 1US $has fallen from Rs 75 to RS 70. Has the Indian 1
currency appreciated or depreciated?
9. When the foreign exchange rate increases the-------------- will fall. 1
(Exports/Imports) Choose the correct answer.
10. Define spot exchange rate. 1
(Short answer type questions-3/4 marks)
11. Distinguish between devaluation and depreciation of domestic 3
currency.
12. Write a short note on managed floating exchange rate system. 3

13. Explain the function of foreign exchange market 3