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    Question

    Suppose, today, the exchange rate of rupee to dollar

    changed from Rs 65/dollar to Rs 60/dollar. This phenomena is called:
    A Appreciation Correct Answer Incorrect Answer
    B Depreciation Correct Answer Incorrect Answer
    C Devaluation Correct Answer Incorrect Answer
    D Revaluation Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Since the exchange rate is improving, it will be called appreciation. Again now India followed managed Floating Exchange Rate, thus it will be called appreciation. In the Fixed Exchange Rate regime, it would have called Revaluation. Similarly if exchange rate decreases, it would be called depreciation.

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