Question

12. What will be the effect of borrowings from abroad on foreign exchange rate? *

1 point

(b) falls

(d) may be rise or falls

(c) unaffected

(a) rises

​

Answer 1

Explanation:

Changes in the currency exchange rate can affect unemployment. Currency appreciation makes imports cheaper, and exports become less competitive, so the domestic demand falls. Local companies try to reduce costs and might cut jobs, causing unemployment to rise.