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State three sources each of demand and supply of foreign exchange.[3 marks question]

This topic has been covered in detail in our study material. You can refer to the same following the below mentioned path.
Macroeconomics- Chapter 6 (Open economy macroeconomics)- Lesson 2 (Meaning and Type of Exchange Rate, Determination of Exchange Rate)- under the topic 'Determination of Exchange Rate under the Flexible Exchange Rate Regime'

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Demand for foreign exchange:

1. Purchase of goods and services in foreign land.

2. Payment of international loans

3. Tourism

Supply for the foriegn exchange:

1. Forerign direct investments in home country

2. Tourism

3. Purchase of goods and services by foriegners.

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demand for foreign exchange-1) for importing goods and services2) for making transfer payments such as gifts3) for making investments in rest of the world in physical and financial assets

supply of foreign exchange-1) from exporting goods and services2) from receiving factor payments such as compensation of employees3) from investmnet by foreign companies in physical and financial assets of the country

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