Explain the Effect of Depreciation of Domestic Currency on Exports. - Economics


Explain the effect of depreciation of domestic currency on exports.



With the depreciation of the domestic currency, the demand for the exports (by the native country) rises. This is because depreciation of domestic currency results in the fall in the price of the domestic currency in terms of foreign currency. This makes the exports cheaper and dearer and thereby their foreign demand increases.

In the above case, Indian Rupee has depreciated in terms of USD from Rs 45 to Rs 50. Consequent of this fall in the Indian Rupee, the demand for Indian exports will rise, as it is more cheaper for the Americans to buys the same goods at lower price of Rs 50. Thus, as they can buy more of goods using the same 1$ (as before), so this would raise the demand for Indian exports.

Concept: Depreciation
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2012-2013 (March) All India Set 1


Depreciation of fixed capital assets refers to :

(a) Normal wear and tear

(b) Foreseen obsolescence

(c) Normal wear and tear and foreseen obsolescence

(d) Unforeseen obsolescence.

Which account is credited when depreciation is charged on the asset?

Answer in One Sentence only:

What is depreciation?

Answer in One Sentence only:

Why depreciation is charged?

Write the word/term/phrase which can substitute the following statement:

A continuous, gradual and permanent reduction in the value of a fixed asset.

Select the most appropriate answer from the alternatives given below and rewrite the sentence:

Decrease in the value of fixed assets is known as ______

Do you agree or disagree with the following statement:

Depreciation is non-cash expense.

Complete the following sentence:

Gradual and permanent decrease in the value of asset is known as ____________

Complete the following sentence:

Depreciation is derived from a Latin word ______.

What is meant by depreciation?

Depreciation expenses are included in:

What is the consumption of fixed capital called?

Correct the following statement and rewrite the statement.

Depreciation is calculated on all assets.

Correct the following statement and rewrite the statement.

Depreciation provided on assets is debited to an asset accounts

 Correct the following statement and rewrite the statement.

Profit on sale of the asset is credited to an asset account.

Distinguish between depreciation and capital loss.

On 1st April 2015, Farid of Nasik purchased a Motor Car for ₹ 55,000. The scrap value of the Motor Car was estimated at ₹ 10,000 and its estimated life is 10 years. The Registration charge for the Motor Car was ₹ 5,000.
Show Motor Car Account for first four years, assuming that the books of accounts are closed on 31st March every year.


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