Define foreign exchange rate. Why does the demand for foreign exchange rise when its price falls?

Distinguish between balance of trade and balance of payment.

Explain two sources each of demand and supply of foreign exchange.

Explain two merits each of flexible foreign exchange rate and fixed foreign exchange rate.

The following figures are based on the balance of payments accounts:

S.No.		(₹ in crores)
1.	Imports of goods.	400
2.	Export of goods.	340
3.	Shipping.	3
4.	Travel Tourism, etc.	5
5.	Interest, dividends, profits.	50
6.	Unilateral Transfers.	40

Calculate Balance of Trade.

What is meant by inflationary gap? State three measures to reduce this gap.

"India is taking huge leaps in the index of Ease of Doing Business, as a result many MNCs are shifting their production base to India." In the light of the above statement, comment upon the flow of foreign exchange and its likely impact on the Indian Economy.

An economy is in equilibrium. From the following data about an economy calculate autonomous consumption.

1. Income = 5000
2. Marginal propensity to save = 0.2
3. Investment expenditure = 800

What is meant by foreign exchange rate? Why does a rise in foreign exchange rate cause a rise in its supply?