Question

Other things remaining unchanged, when in a country the price of foreign currency rises, national income is __________.

• A. likely to rise
• B. likely to fall
• C. likely to rise and fall both
• D. remain unaffected

Answer 1

Answer: (A)

likely to rise

Other things remaining unchanged, when in a country the price of foreign currency rises, national income is likely to rise as it indicates that the greater flow of foreign exchange in the domestic economy promotes higher level of development. Hence, national income rises as the price of foreign currency rises.