Match List-I with List-II
List-I List-II (A) Exchange Rate (I) Supply of foreign exchange = Demand of foreign currency. (B) Gold standard system of exchange rate (II) Domestic currency loses its value in relation to a foreign currency. (C) Par rate of exchange (III) External value of the domestic currency. (D) Currency Depreciation (IV) An old variant of fixed exchange rate.
Choose the correct answer from the options given below:
Match List-I with List-II
| List-I | List-II |
|---|---|
| (A) Exchange Rate | (I) Supply of foreign exchange = Demand of foreign currency. |
| (B) Gold standard system of exchange rate | (II) Domestic currency loses its value in relation to a foreign currency. |
| (C) Par rate of exchange | (III) External value of the domestic currency. |
| (D) Currency Depreciation | (IV) An old variant of fixed exchange rate. |
Choose the correct answer from the options given below:
Solution
Option 1: (A) - (III), (B) - (IV), (C) - (I), (D) - (II) -> Let's match each term correctly: (A) Exchange Rate - (III) External value of the domestic currency: Exchange rate represents the value of one currency in terms of another, i.e., the external value. (B) Gold standard system - (IV) An old variant of fixed exchange rate: Under the gold standard (used historically), currencies were pegged to gold, creating a fixed exchange rate system. (C) Par rate of exchange - (I) Supply of foreign exchange = Demand of foreign currency: Par rate is the equilibrium exchange rate where supply equals demand. (D) Currency Depreciation - (II) Domestic currency loses its value in relation to a foreign currency: Depreciation means the domestic currency becomes weaker relative to foreign currencies. -> correct
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