What does an increase in a country's exchange rate implies in terms of foreign currency?
What does an increase in a country's exchange rate implies in terms of foreign currency?
Solution
✅ Correct Option: 3
The exchange rate is quoted as units of domestic currency per unit of foreign currency. A rise in this rate means more domestic currency is needed to buy the same foreign currency, so the domestic currency has lost value in terms of foreign currency, which is depreciation.
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