ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A rise in the exchange rate
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A fall in the exchange rate
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No change in the exchange rate
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None of the above
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Detailed explanation-1: -A weaker domestic currency stimulates exports and makes imports more expensive; conversely, a strong domestic currency hampers exports and makes imports cheaper. Higher inflation can also impact exports by having a direct impact on input costs such as materials and labor.
Detailed explanation-2: -Transaction gains or losses arise due to changes in the exchange rate among: the transaction date and the settlement date; the transaction date and a subsequent balance-sheet date; or. a subsequent balance-sheet date and the settlement date.
Detailed explanation-3: -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-4: -2. Foreign Investment: The amount, which foreigners invest in the home country, increases the supply of foreign exchange.