Question

Analyse the effect of the following on imports and exchange rate. 

1. Appreciation of domestic currency. 

2. Depreciation of domestic currency 

3. Increase in foreign direct investment. 

4. Increase in import duty.

Answer 1

1. Increase in Imports, Fall in Exchange Rate 

2. Decrease in Imports, Rise in Exchange Rate 

3. Increase in Imports, Fall in Exchange Rate 

4. Decrease in Imports, Fall in Exchange Rate