A currency depreciates when
A) the price of that currency rises in the currency exchange markets.
B) foreigners make agreements with each other to increase competition for that currency.
C) the economy of that country is growing too rapidly.
D) it becomes less valuable relative to other currencies.

Question

Quizplus · Accepted Answer

A currency depreciates when its value decreases relative to other currencies. This can happen due to various factors such as inflation, political instability, a widening trade deficit, or a decrease in demand for that currency in the international market. When a currency depreciates, it means that it can buy fewer units of other currencies, making imports more expensive and exports cheaper.

A Currency Depreciates When