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Open Economy Macroeconomics — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsOpen Economy Macroeconomics3 Marks
Question
How does giving incentives for exports influence foreign exchange rate? Explain.
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Answer

Incentives for exports are aimed at increasing exports. Increase in exports will bring more foreign exchange into the country .Demand for foreign exchange remaining unchanged, exchange rate is likely to fall.

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