Question

From the following, identify the correct reasons that may affect the supply of foreign exchange in an economy: 
I. Purchase of land in England by an Indian 
II. Foreign tourists visiting Taj Mahal 
III. Donation of 500 million dollars from Microsoft 
IV. Indian students going to Australia for studies

• A. I and II
• B. II and IV
• C. II and III
• D. I and IV

Hint:

Foreign inflows, such as tourist spending and donations, directly increase the supply of foreign exchange in the economy.

Answer 1

The Correct Option is C

Reason II (Foreign tourists visiting Taj Mahal) will bring foreign exchange into India as they spend money during their visit. 
Reason III (Donation of 500 million dollars from Microsoft) will also increase foreign exchange supply as it is an inflow of funds into the economy. 
Conclusion: The correct answer is (C), as foreign tourists and donations will directly impact the supply of foreign exchange.