3.3.4 - Foreign Exchange Reforms
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Practice Questions
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Define Foreign Exchange.
💡 Hint: Think about the currencies exchanged between different countries.
What does devaluation mean?
💡 Hint: Consider what happens to the price of goods when a currency devalues.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What was the major effect of the 1991 devaluation of the Indian Rupee?
💡 Hint: Think about how international prices change relative to local currency.
True or False: The exchange rate was initially determined by market forces after the reforms.
💡 Hint: Reflect on the initial conditions before the reforms were enacted.
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Challenge Problems
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Suppose the Indian government again faces a balance of payments crisis. Discuss possible steps that could be taken based on lessons learned from the 1991 reforms.
💡 Hint: Consider both short-term and long-term strategies.
Evaluate the effects of a sudden devaluation on inflation and consumer behavior in India.
💡 Hint: Think about how consumers react when their purchasing power decreases.
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