CA Foundation P4 · Chapter 9 · Question 10 of 15
Other things being equal, a depreciation of the Indian rupee against the US dollar will tend to:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Make Indian exports cheaper for US buyers and imports from the US costlier for Indians
Explanation
When the rupee depreciates, one dollar buys more rupees. Indian goods priced in rupees become cheaper in dollar terms, encouraging exports, while US goods cost more rupees, discouraging imports.
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