When the value of one currency increases relative to the value of another currency, it has experienced:
A) exchange rate depreciation.
B) exchange rate appreciation.
C) interest rate depreciation.
D) net capital inflow.

Question

Quizplus · Accepted Answer

When the value of one currency increases relative to another currency, it is experiencing exchange rate appreciation. This means that it can buy more of the other currency than before. Conversely, exchange rate depreciation means that the value of a currency has decreased relative to another currency. Interest rate depreciation and net capital inflow are not directly related to changes in exchange rates.

When the Value of One Currency Increases Relative to the Value