Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

"Decrease in value of domestic currency in terms of foreign currency by RBI"

What does the above statement indicate?

Options:

Devaluation of foreign currency

Appreciation of domestic currency

Devaluation of domestic currency

Depreciation of domestic currency

Correct Answer:

Devaluation of domestic currency

Explanation:

Decrease in value of domestic currency in terms of foreign currency by RBI is devaluation of domestic currency. Had the decrease happened due to market forces of demand and supply, it would have been termed as depreciation.