Question : When a country's currency appreciates, it means that:
Option 1: Its value decreases relative to other currencies
Option 2: Its value increases relative to other currencies
Option 3: It remains stable against other currencies
Option 4: It has no impact on other currencies
Correct Answer: Its value increases relative to other currencies
Solution : When a country's currency appreciates, it means that its value has increased relative to other currencies. In other words, more of another currency can be purchased with one unit of the appreciating currency. For example, if the exchange rate between the US dollar and the euro is 1 USD = 0.85 EUR and it changes to 1 USD = 0.90 EUR, then the US dollar has appreciated relative to the euro because you can now buy more euros with one US dollar.
Currency appreciation can occur due to a variety of factors, such as increased demand for the currency, higher interest rates, or positive economic news. While currency appreciation can have benefits such as reducing the cost of imports, it can also make exports more expensive, which can negatively impact a country's trade balance and economic growth.
Option 1: Its value increases relative to other currencies.
Option 2: Its value decreases relative to other currencies.
Option 3: Its value remains constant.
Option 4: None of the above.
Question : When a country's currency is undervalued, it means that:
Option 1: Its value increases relative to other currencies
Option 2: Its value decreases relative to other currencies
Option 3: Its value remains the same as other currencies
Option 4: Its value cannot be determined accurately
Question : When a country's currency depreciates, it means that:
Option 1: Its value decreases relative to other currencies.
Option 2: Its value increases relative to other currencies.
Question : The currency of one country is said to appreciate when its value ________ in relation to another currency.
Option 1: increases
Option 2: decreases
Option 3: stabilizes
Option 4: remains constant
Question : A decrease in a country's exports is likely to result in:
Option 1: Appreciation of its currency
Option 2: Depreciation of its currency
Option 3: No impact on its currency
Option 4: A fixed exchange rate
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