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Balance of Payments

Suppose that ...

Question

Suppose that 1$= Rs. 60.

The demand for rupees increases and then the exchange rate is such that 1$=Rs. 55. This is an example of which of the following:

A

Depreciation

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B

Appreciation

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C

Revaluation

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D

Devaluation

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Solution

The correct option is B
Appreciation

This is appreciation because it occurs due to market forces.

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