Other things remaining unchanged when in a country the price of foreign currency rises national inco...........

Economics (CUET) Balance of Payments

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

likely to rise

likely to fall

likely to rise&fall

not effected

- When the price of foreign currency rises, it means the domestic currency has depreciated.

- A weaker domestic currency makes exports cheaper and imports more expensive.

- This can increase exports and reduce imports, thus potentially boosting national income through higher net exports.

- But if the country is heavily import-dependent, costs of production may rise, potentially reducing national income.

- The overall effect depends on the country's export and import structure.

Correct option:

- Option:1, likely to rise

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