Which of the following refers to decrease in the domestic currency by the government and market forces ?
Answer & explanation
Correct answer: option 3
The correct answer is Option 3: Government - Devaluation, Market forces - Depreciation
When the exchange rate is influenced by the government, it is known as Devaluation (decrease in value of domestic currency) /Revaluation of currency(increase in value of domestic currency)
When the exchange rate is influenced by the market force of demand and supply, it is known as Depreciation (decrease in value of domestic currency) /Appreciation of currency (increase in value of domestic currency).