Owing to the current political instability across many countries, the Indian rupee has sharply lost its value in terms of US dollars. The impact of this would be :
(A) A rise in imports from USA
(B) A fall in imports from USA
(C) A rise in exports to USA
(D) A fall in exports to USA
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 4
The correct answer is: (B) and (C) only.
Here's why:
- (A) A rise in imports from USA: This is incorrect. A weaker rupee makes imports from the USA more expensive, discouraging them.
- (B) A fall in imports from USA: This is correct. A weaker rupee makes imports from the USA more expensive, discouraging them.
- (C) A rise in exports to USA: This is correct. A weaker rupee makes Indian exports cheaper for US buyers, potentially increasing them.
- (D) A fall in exports to USA: This is incorrect. A weaker rupee makes Indian exports cheaper for US buyers, potentially increasing them.