Question : In the context of foreign exchange rates, what does the term "appreciation" refer to?
Option 1: Increase in the value of a currency
Option 2: Decrease in the value of a currency
Option 3: Stable value of a currency
Option 4: Convertibility of a currency
Correct Answer:
Increase in the value of a currency
Solution : The correct option is a) Increase in the value of a currency
In the context of foreign exchange rates, "appreciation" refers to the increase in the value of a currency relative to other currencies. When a currency appreciates, it means that it can buy more units of another currency or goods and services in international markets. Appreciation can occur due to various factors such as strong economic performance, high interest rates, positive investor sentiment, increased demand for the currency, or a decrease in the supply of the currency. Currency appreciation can have implications for international trade, investment, and the overall economy of a country.
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