Question

If the exchange rate between the US and India changes from $1=60 rupees to $1=10 rupees, ceteris paribus..."

a. US exports to India will increase.
b. US imports from India will increase.
c. US exports to India will decrease.
d. US imports from India will decrease.

Answer 1

US imports from India will increase.

Step-by-step explanation:

The change in exchange rate from $1=60 rupees to $1=10 rupees means that the value of the US dollar has appreciated compared to the Indian rupee. It means that with the new exchange rate, US goods and services will become more expensive for Indian consumers, while Indian goods and services will become cheaper for US consumers.

Therefore, ceteris paribus, the answer to the question is that US imports from India will increase because the cheaper Indian goods and services will be more attractive to US consumers.