Question : Assume that the exchange rate between the US Dollar and the Indian Rupee is $1=INR 55. Now if this exchange rate increases to $1=INR 60, then in this case the Indian Rupee has ____ in comparison to the US dollar.
Option 1: depreciated
Option 2: appreciated
Option 3: demonetised
Option 4: overvalued
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Correct Answer: depreciated
Solution : The correct answer is depreciated .
If the exchange rate between the US Dollar (USD) and the Indian Rupee (INR) increases from $1 = INR 55 to $1 = INR 60, it means that the Indian Rupee has depreciated in comparison to the US Dollar. The value of the Indian Rupee has decreased, and it now takes more Indian Rupees to buy one US Dollar. This change in the exchange rate indicates a weakening of the Indian Rupee against the US Dollar.
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