Which of the following statements is true?

If exchange rate changes from $\$$1 = ₹85 to $\$$ 1 = ₹90

(A) Imports will fall.
(B) Imports will rise.
(C) Exports will rise.
(D) National income will rise.

Choose the correct answer from the options given below:

(A), (C) and (D) only

The correct answer is Option (1) → (A), (C) and (D) only

When the exchange rate changes from $1 = ₹85 to $1 = ₹90, it means the rupee has depreciated (you now need more rupees to buy 1 dollar). This has the following effects:

• (A) Imports will fall: True. Since foreign goods become more expensive in rupees, people and businesses in India will import less.

• (C) Exports will rise: True. Indian goods become cheaper for foreigners, so exports increase.

• (D) National income will rise: True. Increased exports mean higher demand for domestic goods, leading to higher production, employment, and national income.

• (B) Imports will rise: False. Depreciation makes imports more expensive, leading to a decrease, not an increase, in imports.