International Economics

To correctly match List-I with List-II, let's examine each item:

• Autonomous items are transactions that occur for business or personal reasons irrespective of balance of payment considerations. These are known as above the line items (II).
• Accommodating items are transactions made to compensate for any deficit or surplus in the autonomous items. These are referred to as below the line items (IV).
• Balance of trade refers to the net of visible trade, which is the difference between the value of exports and imports of goods (I).
• Capital account comprises of financial transactions like foreign direct investment and portfolio investment (III).

Thus, the correct matching is: (A)-(II), (B)-(IV), (C)-(I), (D)-(III)

The change in the value of the US dollar from 1 USD = 81 to 2 USD = 161 indicates that the rupee has lost value relative to the US dollar. This can be analyzed as follows:

1. Initially, 1 USD was equivalent to 81 rupees. This is the initial exchange rate.
2. After the change, the exchange rate becomes 161 rupees for 2 USD. To find the per USD rate, divide by 2: 161/2 = 80.5.
3. Now, compare the initial rate (81) with the new exchange rate per USD (80.5):
   • If 1 USD is now less in rupees compared to before (79 > 80.5), the rupee has appreciated.
   • If 1 USD is now more in rupees compared to before (81 < 80.5), the rupee has depreciated.
4. Since 1 USD used to be 81 rupees and is now effectively 80.5 rupees, it shows that the rupee's value relative to the dollar has decreased.

Therefore, this is termed as the Depreciation of rupee.