Author Question: What are the differences and similarities between a depreciation and devaluation of a currency? ... (Read 82 times)

joesmith1212 · **on:** Jun 30, 2018

What are the differences and similarities between a depreciation and devaluation of a currency?

What will be an ideal response?

Question 2

Adam Smith created the theory of comparative advantage.

Indicate whether the statement is true or false

Cnarkel · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A depreciation of a currency takes place due to the mechanics of supply and demand and belongs to a flexible or floating exchange rate system. On the other hand, devaluation is due to the intervention by the monetary authority of a central bank of a country following a fixed exchange rate system. They both result in a lower value of the currency.

Answer to Question 2

FALSE