Practicing Success
Practicing Success
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In the question given below, there are 2 statements marked as Assertion (A) and Reason (R). Choose the correct alternative from the following options. Assertion (A)- As, Mittali is traveling to Japan for her honeymoon, we will consider this as a source of demand for foreign exchange. Reason (R)- Any transaction that results in the receipt of foreign exchange leads to an increase in the demand for foreign exchange.
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Both (A) and (R) are true and (R) is the correct explanation. Both (A) and (R) are true but (R) is not the correct explanation of (A). (A) Is true but (R) is false. (A) Is false but (R) is true. |
(A) Is true but (R) is false. |
The demand for foreign exchange arises in order to make payments in foreign currency. When Mittali visits Japan, all her expenses will be done in Japanese currency i.e. Japanese Yen. Thus, we will say there will be an increase in the demand for currency. whereas, supply of currency increases when there is receipt of foreign currency in the country. |
