Suppose That, Using a System of Multiple Exchange Rates, India

Multiple Choice

Suppose that, using a system of multiple exchange rates, India wishes to discourage investors from sending their funds abroad relative to employing the funds in production for export. If the exchange rate for exports were set at 33⅓ Indian rupees = $1.00, then which one of the following exchange rates for capital transactions would potentially be appropriate for implementing the strategy?

A) 20 Indian rupees = $1.00
B) 1 Indian rupee = $0.03
C) 1 Indian rupee = $0.02
D) 1 Indian rupee = $0.06