Class 12 Macroeconomics Sandeep Garg Solutions Chapter 11 - Foreign Exchange Rates
Countries across the world have their respective currencies. The values of these currencies vary from one nation to another, depending on the country’s economic status. To trade among themselves, countries need to exchange currencies. This is where the Foreign Exchange Rate comes into play. It is the rate at which one currency is exchanged for another. The CBSE Macroeconomics syllabus comprises an elaborate chapter on FOREX (Foreign Exchange). The concepts of FOREX are discussed in the Sandeep Garg Macroeconomics Class 12 Solutions Chapter 11.
This chapter has been drafted in a question-answer format. A total of 7 solutions have been provided in this chapter, which is also accompanied by diagrams. Thus, students can understand and learn the topics covered in this chapter by referring to these solutions.
FAQs on Sandeep Garg Macroeconomics Class 12 Solutions Chapter 11
1. What are The Different Types of Exchange Rate Systems?
The different types of exchange rate systems are fixed exchange rate, flexible exchange rate, and managed floating exchange rate system. Each of these systems has their respective merits and demerits for determining FOREX rate.
2. How Many Questions Are There in Chapter 11 of Sandeep Garg Macroeconomics Solutions for Class 12?
There are seven questions in the Sandeep Garg class 12 macroeconomics solutions chapter 11. These questions are related to the foreign exchange system, its functions, types, and so on.
3. What is the Meaning of RER in Economics?
RER is economics stands for Real Exchange Rate. It is calculated keeping aside the effects of changing prices in an economy. Thus, RER is determined based on constant or fixed prices.
4. Why choose Sandeep Garg Solutions Chapter 11 - Foreign Exchange Rates?
Sandeep Garg Class 12 Macroeconomics Solutions Chapter 11: Foreign Exchange Rates are explained by expert economics teachers. Here, we have provided solutions from foreign exchange rates, which will be helpful to students to get good marks in board exams. This experience is especially important for students who prepare on their own and home studies. Preparing for an exam will be much easier with these solutions. We have included a few solutions based on foreign exchange rates that are bound to help students do well in their board exams.
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6. What is the shape of the demand curve of foreign exchange?
The negatively sloped demand curve (DD) indicates additional foreign exchange (OQ1) is required for a low exchange rate (OR1), whereas, the demand for US dollars falls to OQ2 if the exchange rate rises to OR2. The curve of the need for foreign exchange declines due to the negative relationship between foreign exchange demand and the exchange rate. This is because the rise in the price of foreign currency increases the price of a rupee of foreign goods, making it more expensive. As a result, imports are declining.
7. What is the exchange depreciation? What is the effect of domestic currency on exports of the country?
Reduction of the exchange rate of a foreign currency in its true relative value (as the purpose of encouraging exports) is called exchange depreciation. With the decline in the value of domestic money, the demand for export (in the country of origin) increases. This is because the depreciation of domestic currency results in a fall in the price of the domestic currency in terms of foreign currency. Depreciation increases the demand for domestically produced goods by deducting their relative price in the foreign exchange chapter.
8. What do you mean by foreign exchange market?
The foreign exchange market (also known as forex, FX, or financial market) is an over-the-market (OTC) global marketplace that determines the exchange rate of currencies worldwide. Participants in these markets can buy, sell, exchange, and speculate exchange rates related to pairs of various currencies. Foreign exchange markets are made up of banks, forex traders, trading companies, major banks, investment management firms, hedge funds, forex traders, and investors. It is by far the largest financial market in the world and comprises a global network of financial centers that transact 24 hours a day, closing only on the weekends.