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Open Economy Macroeconomics — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsOpen Economy Macroeconomics3 Marks
Question
When exchange rate of foreign currency falls, its demand rises. Explain, how?
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Answer

When exchange rate falls imports become cheaper. Demand for imports rises and so rises the demand for foreign exchange to purchase more imports.

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