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Foreign Exchange is required for
- Import of Goods and Service
- Sending Gifts/Unilateral Transfers Abroad
- Investment Abroad (Purchase of Assets abroad)
- Tourism (People visiting abroad have to purchase foreign currency)
- Speculation (People buy foreign currency if they expect its price to go up)
Relation between Foreign Exchange Rate and Foreign Exchange Demand
Demand for Foreign Exchange is inversely proportional to Rate of Foreign Exchange
If Rate of Foreign Exchange Rises
It leads to Decrease in Demand of Foreign Exchange
If Rate of Foreign Exchange Decreases
It leads to Increase in Demand of Foreign Exchange
Are the concepts of demand for domestic goods and domestic demand for goods the same?View Answer
No, the concepts of demand for domestic goods and domestic demand for goods are not the same
Demand for domestic goods includes the domestic as well as foreign demand for goods made in domestic country.
Domestic demand for goods includes the domestic demand for domestic as well as foreign goods.
In the following questions, select the correct answers:
Import of goods and services raises the _____ of foreign exchange.
- Both A and B
- Neither A nor B
Demand for foreign exchange raises because of:
Import of Goods and Service