Question:medium
Read the following statements carefully :
Statement 1: Import of heavy machinery from Japan is a source of demand for foreign exchange.
Statement 2: Financial aid by International Bank for Reconstruction and Development (IBRD) for landslide in Wayanad (Kerala) is a source of supply of foreign exchange.
In the light of the given statements, choose the correct option from the following :
Read the following statements carefully :
Statement 1: Import of heavy machinery from Japan is a source of demand for foreign exchange.
Statement 2: Financial aid by International Bank for Reconstruction and Development (IBRD) for landslide in Wayanad (Kerala) is a source of supply of foreign exchange.
In the light of the given statements, choose the correct option from the following :
Statement 1: Import of heavy machinery from Japan is a source of demand for foreign exchange.
Statement 2: Financial aid by International Bank for Reconstruction and Development (IBRD) for landslide in Wayanad (Kerala) is a source of supply of foreign exchange.
In the light of the given statements, choose the correct option from the following :
Show Hint
Remember, imports create demand for foreign exchange, while foreign aid and exports increase the supply of foreign exchange.
Updated On: Mar 16, 2026
- Statement 1 is true and Statement 2 is false.
- Statement 1 is false and Statement 2 is true.
- Both Statements 1 and 2 are true.
- Both Statements 1 and 2 are false.
Show Solution
The Correct Option is C
Solution and Explanation
Statement 1 is true: Importing heavy machinery from Japan causes a foreign exchange outflow due to the demand for foreign currency.
Statement 2 is true: Financial aid from IBRD to Kerala represents a capital inflow, increasing the supply of foreign exchange.
Statement 2 is true: Financial aid from IBRD to Kerala represents a capital inflow, increasing the supply of foreign exchange.
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