Sia
Question
Statistics
Posted 10 months ago
The currency of Ghana is the cedi and the currency of India is the rupee. India and Ghana are trading partners.
Which of the following would cause the demand for the cedi to increase?
Choose 1 answer:
(A) Indian residents start to view Ghanian assets as riskier
(B) Ghanian residents want more goods exported from India
(C) Indian demand for Ghanian products increases.
(D) Ghanians want to buy more assets from India.
(E) Indian residents use more investment services in Nepal instead of Ghana
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Answer from Sia
Posted 10 months ago
Solution by Steps
step 1
To determine which scenario would lead to an increase in demand for the Ghanaian cedi, we need to understand the basic principles of currency demand in the context of international trade
step 2
An increase in demand for a country's goods and services by foreign entities leads to an increase in demand for that country's currency, as foreign buyers need to exchange their currency for the local currency to pay for those goods and services
step 3
Reviewing the answer choices, we identify which scenario aligns with the principle stated in step 2
step 4
Choice (C) "Indian demand for Ghanaian products increases" directly implies that Indian traders would need more Ghanaian cedi to pay for the increased quantity of Ghanaian goods they wish to purchase
Answer
C
Key Concept
Currency Demand and International Trade
Explanation
When demand for a country's products increases internationally, the demand for that country's currency also increases, as it is needed to complete transactions.
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