Under a flexible exchange rate system a decline in the value of a currency relative to other currencies is a called a(n)________ and under a fixed exchange rate system a decrease in the official value of a currency is called a(n)________.
A)depreciation; devaluation
B)appreciation; revaluation
C)revaluation; appreciation
D)depreciation; appreciation

Question

Quizplus · Accepted Answer

A depreciation is a decrease in the value of a currency relative to other currencies when exchange rates are flexible and respond to demand and supply. A "devaluation" is a decrease in the official value of a currency in a fixed-exchange-rate system.

Under a Flexible Exchange Rate System a Decline in the Value