Bangladesh and India are trading partners, and there are capital flows between the two countries. Consider the graph tha

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Bangladesh and India are trading partners, and there are capital flows between the two countries. Consider the graph tha

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Bangladesh And India Are Trading Partners And There Are Capital Flows Between The Two Countries Consider The Graph Tha 1
Bangladesh And India Are Trading Partners And There Are Capital Flows Between The Two Countries Consider The Graph Tha 1 (292.73 KiB) Viewed 16 times
Bangladesh and India are trading partners, and there are capitalflows between the two countries. Consider the graph that shows theforeign exchange market in Dhaka, Bangladesh. The initialequilibrium exchange rate is 1.13 Bangladeshi taka per 1 Indianrupee. This rate is denoted as 1.13 BDT / INR in the graph above.Now suppose that the demand for Indian rupees increases such thatthe rate changes to 1.20 BDT / INR. Ceteris paribus, which of thefollowing factors can explain the increase in the demand for Indianrupees, and the resulting change in the exchange rate from 1.13 BDT/ INR TO 1.20 BDT / INR? A rise in real interest rates inBangladesh. An increase in the GDP deflator in Bangladesh. Adecrease in the opportunity cost of consumption in India. A rise inthe cost of consumption in India.
BDT/INR 1.20 BDT/INR 1.13 BDT/INR QO ---- Q1 S D D1
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