Chapter 11: Foreign Exchange Rates is demonstrated by expert economics teachers from the latest edition of Sandeep Garg Macroeconomics Class 12 textbook solutions by Sandeep Garg.
Sandeep Garg Economics Class 12 Solutions are provided by MNS EdTech to provide a detailed understanding of the subject.
These experiences are invaluable to students who are working on their homework or preparing for an exam. We've put together several options based on foreign exchange rates that will help students do well on their board exams.
Sandeep Garg Solutions Class 12 – Chapter 11 – Part B
Question 1
What is foreign exchange?
Answer:
Foreign exchange refers to all the currencies other than the domestic currency of a given country.
Question 2
Mention the effects of exchange depreciation on exports.
Answer:
Currency/exchange depreciation leads to an increase in exports.
Question 3
State the three functions of the foreign exchange market.
Answer:
The three functions of the foreign exchange market are as follows:
- Transfer function
- Credit function
- Hedging function
Question 4
What is meant by the spot exchange rate?
Answer:
The rate of exchange that prevails in the spot market at the time when a foreign currency is bought and sold is known as the spot exchange rate.
Question 5
Define the foreign exchange market.
Answer:
The foreign exchange market is the market where foreign currencies are bought and sold.
Question 6
What is the shape of the demand curve of foreign exchange?
Answer:
The demand curve is downward sloping due to the inverse relationship between the exchange rate and the demand for foreign exchange.
Question 7
What does the forward exchange rate mean?
Answer:
The exchange rate quoted in the forward transaction is known as the forward exchange rate.
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