In India, initial exchange rate $e_0 = 50 $ which means we need to exchange Rs. 50 for one dollar. A new exchange rate $e_1= 75 $ which means Indian currency has witnessed___________.
Answer & explanation
Correct answer: option 4
The correct answer is option (4) : Depreciation
Depreciation: - Depreciation happens when a currency weakens in value compared to other currencies. In this scenario, with the new exchange rate of ₹75 for 1 USD, it means the Indian Rupee has depreciated because it now takes more Rupees to buy the same amount of US Dollars.
In the question, the exchange rate has increased, indicating a weakening of the Indian Rupee against the US Dollar.