Case Interview Prep

Category - Economics

To calculate the depreciation, the following equation is used. The resulting figure is always:
Currency depreciation = old currency value - new currency value
new currency va
  1. negative
  2. positive
  3. multiple of old value
  4. dependent on interest rates
Explanation
Answer: A - The resulting figure of depreciation calculation is always negative.

Key Takeaway: Currency depreciation occurs when domestic currency becomes less valuable than foreign currency. The growing strength of dominant foreign currencies are one reason behind the depreciation of local currency and so are inflationary pressures on an economy.
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