Question

Identify the correct pair as given in Column B by matching them with respective concepts in Column A:

Column A		Column B
(1)	Reduction in the value of  the domestic currency by the government	(a)	Devaluation
(2)	Reduction in the value  of the domestic currency through market forces	(b)	Appreciation
(3)	Increase in the value of   the domestic currency by the government	(c)	Depreciation
(4)	Increase in the value  of the domestic currency through market forces	(d)	Revaluation

Options

• 1 - (a)

• 2 - (b)

• 3 - (c)

• 4 - (d)

Answer 1

1 - (a)

Explanation:

Devaluation refers to a decrease in the value of a domestic currency as a result of the government's purposeful increase in the foreign exchange rate under the fixed exchange rate regime.