© examsnet.com
Question : 3
Total: 5
Distinguish between appreciation of home currency and depreciation of home currency.
Solution:
| Appreciation of homecurrency | Depreciation of home currency |
|---|---|
| (i) It refers to the rise in the value of domestic currency with respect to foreign currency. | It refers to the fall in the value of domestic currency with respect to foreign currency. |
| (ii) It leads to fall in exports and rise in imports. | It leads to fall in imports and rise in exports. |
| (iii) It is due to fall in demand or rise in the supply of foreign currency. | It is due to rise in demand or fall in the supply of foreign currency. |
| (iv) It corrects the situation of BOP (Balance of payments) surplus automatically. | It corrects the situation of BOP (Balance of payments) deficit automatically. |
© examsnet.com
Go to Question: