CUET Preparation Today
Which of the following is revaluation of currency in fixed exchange rate system? |
The price of domestic currency is pegged with two or more foreign currencies When the government decreased the exchange rate When the government increases the exchange rate The price of domestic currency in terms of foreign currency increases. |
When the government decreased the exchange rate |
The correct answer is Option (2) → When the government decreased the exchange rate In a fixed exchange rate system, when some government action increases the exchange rate (thereby, making domestic currency cheaper) is called Devaluation. On the other hand, a Revaluation is said to occur, when the Government decreases the exchange rate (thereby, making domestic currency costlier) in a fixed exchange rate system. |
