Short Answer Type Questions:
When price of a foreign currency rises, its supply also rises. Explain why.

Open in App

Solution

The foreign exchange rate and supply of foreign exchange is positively related and it is upward sloping curve as because the components of supply of foreign exchange rise as foreign exchange rate rises. For example exports rise as the foreign exchange rate rises.

Suggest Corrections

Similar questions

Explain why the supply of a foreign currency rises in response to a rise in its exchange rate.

(a) Balance of payment always balances. Explain.

(b) When the supply of foreign currency rises, the price of foreign currency falls. Justify the statement.

Join BYJU'S Learning Program