ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
a fall in its exports of goods and services
|
|
|
a fall in its imports of goods and services
|
|
|
a fall in its inflow of income
|
|
|
a rise in its outflow of transfers
|
Detailed explanation-1: -If a country exports more than it imports, there is a high demand for its goods, and thus, for its currency. The economics of supply and demand dictate that when demand is high, prices rise and the currency appreciates in value.
Detailed explanation-2: -Higher interest rates offer lenders in an economy a higher return relative to other countries. Therefore, higher interest rates attract foreign capital and cause the exchange rate to rise.
Detailed explanation-3: -When price of a foreign currency rises, domestic goods become relatively cheaper. It induces the foreign country to increase their imports from the domestic country. As a result, supply of foreign currency rises.
Detailed explanation-4: -2) When price of a foreign currency falls, its demand rises as more people want to make gains from speculative activities.
Detailed explanation-5: -Interest and inflation rates. Inflation is the rate at which the cost of goods and services rises over time. Current account deficits. Government debt. Terms of trade. Economic performance. Recession. Speculation. 06-Sept-2022