When the value of one currency increases relative to the value of another currency, the currency with increasing value has experienced:
A) exchange rate depreciation.
B) exchange rate appreciation.
C) interest rate depreciation.
D) exchange rate arbitrage.

Question

Quizplus · Accepted Answer

When the value of one currency increases relative to the value of another currency, it is called exchange rate appreciation, not depreciation (option A). Interest rate depreciation (option C) is not a valid term. Exchange rate arbitrage (option D) refers to taking advantage of price differences between two or more markets, and is not relevant to this situation.

When the Value of One Currency Increases Relative to the Value