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When the value of the currency falls as compared to other currencies, it is ______ -

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Question

When the value of the currency falls as compared to other currencies, it is ______   

Options

  • Devaluation

  • Depreciation

  • Both devaluation and depreciation

  • None of the above

MCQ
Fill in the Blanks

Solution

When the value of the currency falls as compared to other currencies, it is depreciation.

Explanation:

Depreciation occurs when the value of a currency falls in comparison to other currencies. It exists in a flexible exchange rate environment. It's due to the forces of demand and supply.

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