Consider the two exchange rates in period 1 and period 2: $$E _ { 1 } = \frac { R s 46.6 } { \$ 1 } \text { and } E _ { 1 } = \frac { R s 53.4 } { \$ 1 }$$
.
(Rs is the Indian rupee.)
Over this time, the dollar has depreciated.

Question

Consider the two exchange rates in period 1 and period 2: $$E _ { 1 } = \frac { R s 46.6 } { \$ 1 } \text { and } E _ { 1 } = \frac { R s 53.4 } { \$ 1 }$$ 
.
(Rs is the Indian rupee.)
Over this time, the dollar has depreciated.

Quizplus · Accepted Answer

The dollar has appreciated because it now exchanges for more rupees (from Rs 46.6 to Rs 53.4 per $1).

Consider the Two Exchange Rates in Period 1 and Period E1=Rs46.6$1 and E1=Rs53.4$1E _ { 1 } = \frac { R s 46.6 } { \$ 1 } \text { and } E _ { 1 } = \frac { R s 53.4 } { \$ 1 }E1​=$1Rs46.6​ and E1​=$1Rs53.4​

Consider the Two Exchange Rates in Period 1 and Period $E _ { 1 } = \frac { R s 46.6 } { \$ 1 } \text { and } E _ { 1 } = \frac { R s 53.4 } { \$ 1 }$