Nominal exchange rate is defined as the amount of domestic currency that can fetch one unit of foreign currency. Suppose that there is a fall in nominal exchange rate.
Which of the following statements is/are TRUE?
Select all that apply.
2 marksInternational EconomicsBalance of payments and exchange ratesExchange rate conceptsModerateabout 2 min
GATE 2026 Question 55: Balance of payments and exchange rates
Answer and worked solution
Checking your account…
Balance of payments and exchange rates has come up 120 times in 7 exams since 2007.
What this question tests
This question is on Exchange rate concepts, part of Balance of payments and exchange rates in International Economics.
Nominal, real and effective exchange rates and how they are quoted and converted.
TestStop has 19 past-paper questions on this subtopic; the nearest in year are below.
Similar questions from other papers
- When there is no change in central banks holding of international reserves, a country's:
- Identify the CORRECT statement(s) in the context of an open economy.
- Devaluation of Currency has the following effects: A. Changes relative domestic price B. Increases the tax value of domestic currency C. Increases the competitiveness…
- Expenditure towards the maintenance of embassies and diplomatic missions are included in which of the following account of the balance of payments.
- Which of the following statements is/are CORRECT in the context of Foreign Exchange Market?
Question from the GATE 2026 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.