Doubt Clearance Thread: UPSC 2021

kraantikaarisaid

Right to practice any profession and right to access internet are both fundamental rights, hence statement 1 has to be correct and statement 2 has to be incorrect.

kraantikaarisaid

Governor can dissolve the house when the council of ministers does not have a majority. So statement 2 should be wrong?

@walterwhit3 RER =Nominal exchange rate* (price of good in domestic country/price of good in forign country)

so , if RER is high then price of good in domestic country would be more , hence expensive

if RER is low then price of domestic good is less and hence people would prefer buying domestic goods so imports would reduce and exports would rise.

@mhs11 right to practice any profession ....could mean that any one could even perform gambling on internet...so it must be wrong??

@mhs11 yes , it is situational discretion power of governor....but institute has given it as right....

@kraantikaari NCERT, Class 12, page 79. The formula given is

RER =Nominal exchange rate* (price of good in Foreign country/price of good in Domestic country).

That's why its not making sense

kraantikaarisaid
@mhs11 right to practice any profession ....could mean that any one could even perform gambling on internet...so it must be wrong??

Those are reasonable restrictions. The statements are general. Art 19 does say freedom to practice any profession

@kraantikaari Gambling, Prostitution, Illicit Trde etc. Hence not every right covered.

kraantikaarisaid
@walterwhit3 RER =Nominal exchange rate* (price of good in domestic country/price of good in forign country)

so , if RER is high then price of good in domestic country would be more , hence expensive
if RER is low then price of domestic good is less and hence people would prefer buying domestic goods so imports would reduce and exports would rise.

@kraantikaari NCERT, Class 12, page 79. The formula given is

RER =Nominal exchange rate* (price of good in Foreign country/price of good in Domestic country).

That's why its not making sense

@walterwhit3 I think that is wrong.......

NER For usa is lets suppose 70rs. and price of good in usa is 1$, india is 35rs

so rer=(70rs/1$)*(35rs/1$) with formula in ncert-----units will not get cancel out....hence it must be

rer=(70rs/1$)*(1$/35rs)----in this case rer comes out to be 2 with units get canceled

walterwhit3said
Guys, please explain why both are not wrong.
Why I was thinking that both are wrong:
1: Real exchange rate is defined as the ratio of Foreign Price to Domestic Price. High RER should mean that domestic prices are low.
2. Appreciation of currency or Increased Domestic inflation brings down RER. This reduces competitiveness and hence should reduce exports.
Please explain. Really a headache.

RER is low when currency depreciates. When currency depreciates exports increase.

@kraantikaari,@mhs11
Quoting Wikipedia:
"More in detail, an appreciation of the currency or a high level of domestic inflation reduces the RER, thus reducing the country's competitiveness and lowering the Current Account (CA). On the other hand, a currency depreciation generates an opposite effect, improving the country's CA.^[15]"

https://www.imf.org/external/pubs/ft/fandd/basics/realex.htm

kraantikaarisaid
@walterwhit3 I think that is wrong.......
NER For usa is lets suppose 70rs. and price of good in usa is 1$, india is 35rs
so rer=(70rs/1$)*(35rs/1$) with formula in ncert-----units will not get cancel out....hence it must be
rer=(70rs/1$)*(1$/35rs)----in this case rer comes out to be 2 with units get canceled

Mathematically correct but economically incorrect I guess. Price comparisons have to be made in same denominations. Here is IMF article:

And even if that were true, I think in this case NER would have to be defined in terms of $ per Rupee. As both can be the definition of NER. I have read both formulas on credible sources.

kraantikaari,

walterwhit3said
@kraantikaari,@mhs11
Quoting Wikipedia:
"More in detail, an appreciation of the currency or a high level of domestic inflation reduces the RER, thus reducing the country's competitiveness and lowering the Current Account (CA). On the other hand, a currency depreciation generates an opposite effect, improving the country's CA.^[15]"

Now I am confused too 😅

kraantikaari,walterwhit3

@walterwhit3 yup.... it is very confusing.....various sources on this concept are contradictory.......

@walterwhit3 I think some economics optional student could give much better perspective.....anyone???

I know bhai log. Mera dimag kha gaya!! I wouldn't have posted here otherwise. :\

kraantikaari,

@walterwhit3 that's why I just picked one source ....from that I am getting answer.....and I am thus assuming that as correct......mathematically also getting answer......and we didnt have to go into much depth ...just need to understand basic

in this question ...can we assume 2nd statement as general statement......which is true except in some situations????

like right to practice any trade is general statement ....although there are restrictions but from solely reading this statement it seems wrong becoz of word "any".

what to consider in these type of questions? Is there any upsc previous year question like this??