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Open Economy Macroeconomics — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsOpen Economy Macroeconomics3 Marks
Question
Differentiate between devaluation and depreciation.
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Answer

Devaluation
Depreciation
It occurs when the currency exchange rate is officially lowered under fixed exchange rate system.
When the value of currency falls as compared to other currencies, it is known as depreciation.
It exists under fixed exchange rate.
It exists under flexible exchange rate.
It is due to government’s decision.
It is due to the demand and supply forces.

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