Match List-I with List-II
|
List-I |
List-II |
|
(A) Devaluation |
(I) Price of foreign currency in terms of domestic currency increase |
|
(B) Revaluation |
(II) Price of domestic currency in terms of foreign currency increases |
|
(C) Depreciation |
(III) Increase the exchange rate by the action of the Government |
|
(D) Appreciation |
(IV) Decreases the exchange rate by the action of the Government |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A)-(III), (B)-(IV), (C)-(I), (D)-(II)
|
List-I |
List-II |
|
(A) Devaluation |
(III) Increase the exchange rate by the action of the Government |
|
(B) Revaluation |
(IV) Decreases the exchange rate by the action of the Government |
|
(C) Depreciation |
(I) Price of foreign currency in terms of domestic currency increase |
|
(D) Appreciation |
(II) Price of domestic currency in terms of foreign currency increases |
Devaluation (A): Occurs in a fixed system when the Government intentionally decreases the value of the domestic currency. This means the exchange rate (price of foreign currency) is officially increased.
Revaluation (B): Occurs in a fixed system when the Government officially increases the value of the domestic currency, thereby decreasing the exchange rate.
Depreciation (C): Occurs in a flexible system due to market forces. The domestic currency loses value, meaning the price of foreign currency in terms of domestic currency increases (e.g., instead of ₹80 per dollar, it becomes ₹85 per dollar).
Appreciation (D): Occurs in a flexible system when market forces cause the domestic currency to gain value. This means the price of domestic currency in terms of foreign currency increases. (e.g., instead of ₹80 per dollar, it becomes ₹55 per dollar).