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Open Economy Macroeconomics — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsOpen Economy Macroeconomics3 Marks
Question
When price of a foreign currency rises, its demand falls. Explain why.
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Answer

When price of foreign currency rises it makes imports costlier. This leads to fall in demand for imports. As a result demand for foreign exchange falls.

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