The graph shows the demand for dollars rising from D₁ to D₂. Which event could cause this shift? The demand for dollars shifts right from D₁ to D₂ while supply S stays put. Equilibrium moves from E₁ (₹80 per dollar, $40 billion) to E₂ (₹90 per dollar, $50 billion).

The graph shows the demand for dollars…

The graph shows the demand for dollars rising from D₁ to D₂.

Question 23

MediumOriginal question

The graph shows the demand for dollars rising from D₁ to D₂. Which event could cause this shift?

The demand for dollars shifts right from D₁ to D₂ while supply S stays put. Equilibrium moves from E₁ (₹80 per dollar, $40 billion) to E₂ (₹90 per dollar, $50 billion).

A rise in foreign investment into IndiaCorrect answerYour answerA rise in India's software exportsCorrect answerYour answerA rise in the world price of crude oil, which India importsCorrect answerYour answerA rise in remittances from abroadCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

A costlier oil bill means importers need more dollars at every exchange rate: demand shifts right.
The other three add to the supply of dollars.

Concept: What shifts demand for forex
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe flexible rate: depreciation and appreciation

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Ten questions from Foreign Exchange Rate, at your own pace.

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Ten questions from Foreign Exchange Rate, at your own pace.

The graph shows the demand for dollars rising from D₁ to D₂.

Question 23

Explanation