1.

Differentiate between depreciation and devaluation.

Answer»

The difference between depreciation and devaluation is as follows:

DepreciationDevaluation
• Here the price of foreign currency in terms of domestic currency increases.• Here, the government deliberately makes the domestic currency cheaper by increasing exchange rate.
• It happens because of market forces, i.e. demand for foreign exchange and supply of foreign exchange.• It is a deliberate action of government.



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