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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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