CUET CUET Economics 2024 - Under flexible exchange rate, when the price of domestic currency in terms of foreign currency increases, it is called : | PYQs + Solutions

CUET Economics 2024

Economics

Balance of Payments

Easy

Under flexible exchange rate, when the price of domestic currency in terms of foreign currency increases, it is called :

Depreciation of domestic currency

Appreciation of domestic currency

Devaluation of domestic currency

Revaluation of domestic currency

Correct Option: 2

Flexible exchange rate: Currency value fluctuates freely.

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Domestic currency: Currency of the home country.

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Foreign currency: Currency of other countries.

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Depreciation: Currency value decreases.

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Appreciation: Currency value increases.

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Devaluation: Official currency value drop.

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Revaluation: Official currency value rise.

When the price of domestic currency increases in terms of foreign currency, it indicates that the domestic currency has become stronger. This is known as appreciation of domestic currency.

In contrast, a fixed exchange rate system maintains a stable currency value, unlike the flexible system where values fluctuate based on market forces.

CUET Economics 2024 PYQs

Under flexible exchange rate, when the price of domestic currency in terms of foreign currency increases, it is called :

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