Page 2 - HA- Foreign Exchange Rate

14. Explain the effect of fall in the price of foreign currency on exports and 3
imports.
15. Explain why there is a rise in demand for foreign exchange when 4
its price falls.
16. State whether the following items constitute demand or supply of 4
foreign exchange: Give reason
a) Indian going to USA for medical treatment
b) Import of goods from China
c) Donation of 500 million $ received from Microsoft
d) Foreign tourists to visit Taj Mahal in India,
17. Distinguish between fixed and flexible exchange rate. 4
18. The Indian government launched ‘incredible India’ to promote tourism 4
in India. How will it affect the price of foreign exchange? Explain with
the help of a diagram.
(Long answer type questions-6 marks)
19. ‘Equilibrium rate of exchange is determined when the demand for 6
foreign exchange is equal to its supply.’ Explain with the help of a
diagram
20. Briefly discuss the major reason for demand and supply of foreign 6
exchange.