Consider the following statements As rupee depreciates Other country residents can import more from ...........

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Consider the following statements. As rupee depreciates

Other country residents can import more from India for the same amount of foreign currency.
A foreign investor would find it more profitable to invest in India due to the increased value of his investment budget in foreign currency

Which of the above is/are correct?

1 only

2 only

Both 1 and 2

None

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Explanation:

Statement 1: Suppose 1 Kg. of Rice was Rs. 120 in India, and the Dollar-Rupee conversion rate is 60:1, a Us citizen can import 1 Kg of rice from India for $2. If rupee depreciates to the rate of 120:1, the same US resident can now buy 2 kg of rice for the same $2.

Statement 2: Same applies for the foreign investor. If he was willing to invest $1 million which would have given him 60 million rupees of worth, after rupee depreciation, his value of investment in India would be 120 million rupees.