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Economics · 2024 · 3 marks
CBSE 2024 · Region 2 · Set 1 · Q11
“Accommodating transactions are undertaken to maintain stability in the Balance of Payments Account.”Justify the given statement with valid explanation.“Depreciation of currency may promote exports of a nation.”Defend or refute the given statement with valid arguments.
“Accommodating transactions are undertaken to maintain stability in the Balance of Payments Account.”
Justify the given statement with valid explanation.
“Depreciation of currency may promote exports of a nation.”
Defend or refute the given statement with valid arguments.
Marking-scheme solution
Accommodating transactions are commonly undertaken to maintain stability in Balance of Payments (BOP) account. Accommodating transactions are independent of any economic motive. These transactions are determined by the net result of autonomous items such as surplus or deficit in BOP.
Hence, accommodating transactions play a crucial role in maintaining stability in Balance of Payments account by providing a mechanism to address imbalances in international transactions.
The given statement is defended. When the domestic currency of an economy depreciates, domestic goods become relatively cheaper in the international markets. Thereby, increasing the demand of domestic goods globally. Hence, depreciation of currency may promote exports of a nation.
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CBSE Class 12 Economics past-paper question from the 2024board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.