Under which of the following exchange rate systems appreciation and depreciation take place in the exchange rate?
Under which of the following exchange rate systems appreciation and depreciation take place in the exchange rate?
Solution
✅ Correct Option: 2
Appreciation and depreciation refer to market-driven changes in currency value caused by demand and supply of foreign exchange, which occur under a floating (flexible) exchange rate system. Under a fixed system, changes are made by the government and are called revaluation and devaluation.
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