Foreign Exchange Rate-Important Questions

IMPORTANT QUESTIONS

CHAPTER 21: Foreign Exchange Rate

1. What is foreign exchange?
2. What do you mean by managed floating exchange rate?
3. State two sources of supply of foreign exchange?
4. How can reserve bank of India help in bringing down the foreign exchange rate which is very high?
5. What is devaluation?
6. What is meant by foreign exchange rate? Give three reasons why people desire to have foreign exchange?
7. Explain two sources each of demand and supply of foreign exchange?
8. Why does rise in foreign exchange rate cause a rise in its supply?
9. Explain how ‘depreciation of currency’ promotes exports of a country?
10. Explain the effect of appreciation of domestic currency on imports?
11. What is meant by fixed exchange rate system and flexible rate system?
12. Write short notes on:-
1. Spot market
2. Forward market
13. Explain why there is a rise in demand for foreign exchange when its price falls.
14. Explain the effect of a fall in price of foreign exchange market? Explain.
15. When foreign exchange rate in a country is on the rise what impact is it likely to have on imports and how?
16. Explain managed floating exchange rate?
17. Explain by giving examples the distinction between depreciation and devaluation of domestic currency?
18. How is the exchange rate determined in a flexible exchange rate system?
19. Write the merits and demerits of fixed exchange rate system?
20. Devaluation and Depreciation of currency is one and the same thing. Do you agree? How do they affect the exports of a country?
21. With a diagram show increase and decrease in demand?
22. With a diagram show increase and decrease in supply?