Q21 of 30 Page 1

Explain how ‘Depreciation of currency’ promotes exports of a country?

Depreciation of currency means the value of the currency has reduced relative to other currencies.

Depreciation occurs when foreign exchange rate increases, this boosts the purchase of goods and services by the foreign companies. As now they would purchase more products as the prices would be reduced due to the reduced value of the currency. Hence this would boost the economy.


More from this chapter

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19

Which of the following is not a Quantitative Method of credit control? (1)

i) Open Market Operation


ii) Margin Requirements


iii) Variable Reserve Ratio


iv) Bank Rate Policy

 20

What are ‘subsidies’?

 22

If in an economy:

a) Consumption function is given by C = 100 + 0.75 Y, an


b) Autonomous investment is 150 crores.


Estimate (i) Equilibrium level of income and (ii) Consumption and Savings at the


the equilibrium level of income.


OR


Explain how the economy achieves equilibrium level of income using Consumption +


Investment (C+I) approach. (3)

 23

State under what conditions in the following statements may be true:

a. GNDI is equal to GNP at market prices.


b. Domestic Income is greater than National Income


c. Value of output is equal to Value Added