Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

In which of the following situations will domestic currency be said to be depreciated?

Options:

Increase in value of domestic currency in terms of foreign currency

Increase in value of foreign currency in terms of domestic currency

Decrease in value of native currency in terms of domestic currency

None of them

Correct Answer:

Increase in value of foreign currency in terms of domestic currency

Explanation:

Suppose, one dollar = 40 rupees and increase in value of foreign currency in terms of domestic currency means now one dollar = 60 rupees (say). So, one rupee = 1/40 dollar and now one rupee = 1/60 dollar. So Indian rupee i.e. domestic currency has depreciated.