Question

Under ISI exchange rates were overvalued. What is the primary reason that exchange rates were overvalued...

Under ISI exchange rates were overvalued. What is the primary reason that exchange rates were overvalued under ISI?

Homework Answers

Answer #1

Primary reasons for over valuation of ISI exchange rates were:-

  • Over valued Exchange helps in reducing inflation pressure.
  • With ISI, the state could continue the promotion of secondary industrialization with high Tariffs
  • Selective substitution of capital.
  • Overvalued exchange rates.
  • To support domestic production.
  • To produce growth in various sectors.
  • Create Export growth and support for liberalization.
  • To make the countries Exports relatively expensive.
  • Make cheaper Imports.
  • Over valued Exchange rate depresses dometic demand.
  • Improves spending on Imports.
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