Economic Awareness - Sectors of Indian Economy
Which of the following scenarios would most likely lead to depreciation of the Indian Rupee?
Which of the following scenarios would most likely lead to depreciation of the Indian Rupee?
medium Q8 of 15
Step-by-Step Solution
Step 1: Understand inflation impact on currency
Higher inflation relative to trading partners reduces currency value due to loss of purchasing power.Step 2: Analyze options
Rise in inflation relative to others causes depreciation; trade surplus and FDI inflows cause appreciation; political stability strengthens currency.Final Answer:
Rise in India's inflation rate relative to its trading partners → Option BQuick Check:
Higher relative inflation = currency depreciation ✅
Quick Trick: Higher inflation weakens currency.
Common Mistakes:
MISTAKES- Confusing inflation with trade surplus effects.
Master "Sectors of Indian Economy" in Economic Awareness
Start learning the concept with an interactive lesson.
Want More Practice?
15+ quiz questions · All difficulty levels · Free
Free Signup - Practice All QuestionsMore Economic Awareness Quizzes