Question : In the context of foreign exchange rates, what does the term "depreciation" refer to?

Option 1: Increase in the value of a currency
 

Option 2: Decrease in the value of a currency
 

Option 3: Stable value of a currency

Option 4: Convertibility of a currency

Question : In the foreign exchange market, what does the term "liquidity" refer to?

Option 1: The ease of converting a currency into another currency
  

Option 2: The profitability of currency trading
  

Option 3: The stability of exchange rates

Option 4: The demand for a currency

Question : What is the primary objective of a country when it undertakes currency devaluation?

Option 1: To increase the value of its currency
 

Option 2: To stabilize the exchange rate
  

Option 3: To reduce the value of its currency

Option 4: To achieve currency convertibility

Question : What is the term used to describe the practice of pegging a currency to a more stable foreign currency?

Option 1: Fixed exchange rate
  

Option 2: Flexible exchange rate
 

Option 3: Managed float exchange rate

Option 4: Currency board arrangement

Question : Which of the following factors can cause a currency appreciation?

Option 1: Increase in imports
  

Option 2: Decrease in interest rates
    

Option 3: Political instability

Option 4: Trade deficit