SSC MTS 2026 PYQ — Question 59

Correct Answer:

Option 4: A rise in the price of foreign exchange decreases the cost of purchasing a foreign good.

Explanation:

The foreign exchange rate is the rate at which the value of one country's currency is determined in terms of another country's currency. If the price of foreign currency rises (i.e., the domestic currency weakens), purchasing foreign goods becomes more expensive. Therefore, the given statement is incorrect because it asserts that a price increase makes foreign goods cheaper, whereas the reality is the opposite. The foreign exchange rate plays an extremely crucial role in international trade, investment, and economic relations.

Potential Questions for Upcoming Exams:

Question: What is currency devaluation?

Answer: A decline in the value of a currency.

Question: What factors influence the exchange rate?

Answer: Demand and supply.

Question: What is the effect of a strong currency?

Answer: Imports become cheaper.

Question: What are foreign exchange reserves?

Answer: The foreign currency available to a country.