Which of the following statement/statements are true?
Statement 1: Decrease in value of domestic currency in terms of foreign currency is called depreciation of foreign currency.
Statement 2: Decrease in value of foreign currency in terms of domestic currency means appreciation of domestic currency.

Statement 2 is true and Statement 1 is false

The correct answer is Option 4: Statement 2 is true and Statement 1 is false

Let's evaluate each statement:

1. Statement 1: Decrease in value of domestic currency in terms of foreign currency is called depreciation of foreign currency. This statement is false. A decrease in the value of domestic currency in terms of foreign currency is called depreciation of domestic currency, not depreciation of foreign currency. When the domestic currency loses value, it means more of the domestic currency is needed to buy the foreign currency.

2. Statement 2: Decrease in value of foreign currency in terms of domestic currency means appreciation of domestic currency. This statement is true. When the value of the foreign currency decreases relative to the domestic currency, it means that the domestic currency has appreciated. This is because you now need fewer units of the domestic currency to purchase the same amount of foreign currency.