The correct answer is option (4) : Exports increase
- Foreign currency flows into the home country when exports increase because when domestic goods and services are sold abroad, foreign buyers pay in their own currency. This foreign currency is then converted into the home country's currency, increasing its supply.
- When people of the home country send gifts abroad, foreign currency flows out of the home country rather than in.
- When people of home country visits foreign country, foreign currency flows out of the home country.
- When imports increase, more domestic currency is used to purchase foreign goods and services, leading to an outflow of foreign currency rather than an inflow.
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