1.
Bringing out the difference between depreciation and devaluation of a currency, explain how
they affect foreign trade of a country.
Approach:
Briefly discuss the meaning of depreciation and devaluation of a currency.
Highlight the key differences between depreciation and devaluation of a currency.
Bring out their effect on the foreign trade of a country.
2.
Explain the mechanism of credit creation by the banking system in an economy. What are the
factors that limit such credit creation?
Approach:
Introduce with a brief note on credit creation.
Discuss the factors important in determining credit creation.
Explain the process of credit creation in detail.
Discuss the factors limiting creation of credit by the banks.
Conclude on the basis of the above points.
