Consider the following statements about Rupee Devaluation vs Rupee Depreciation 1 When the governmen...........

Economic Affairs Money Supply and Monetary Policy

Consider the following statements about Rupee Devaluation vs Rupee Depreciation

1. When the government reduces the value of a currency under Fixed Rate System, it is known as depreciation.

2. When the value of the currency falls under Floating Rate System, it is called devaluation.

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

The term devaluation is used when the government reduces the value of a currency under Fixed Rate System.
When the value of the currency falls under Floating Rate System, it is called depreciation.
Revaluation is a term which is used when there is a rise of currency to the relation with a foreign currency in a fixed exchange rate.