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Short Answer Type Questions:
Give two reasons for rise in demand for a foreign currency when its price falls.

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Solution

Two reasons for rise in demand for a foreign currency when its price falls are:
1) When a foreign currency becomes cheaper in terms of the domestic currency, it promotes tourism to that country. As a result, demand for foreign currency rises.
2) When price of a foreign currency falls, its demand rises as more people want to make gains from speculative activities.

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