Which term represents currency value decreasing?

• A. Appreciation
• B. Depreciation
• C. Inflation
• D. Deflation

Answer: (B)

Depreciation describes a fall in a currency’s value relative to other currencies. When depreciation occurs, you must pay more of your domestic currency to buy the same amount of foreign currency, or you receive fewer foreign units per domestic unit. This is different from appreciation, where the currency strengthens. Inflation and deflation refer to the general price level of goods and services in the economy, not directly to the currency’s value in exchange markets. Therefore, the term for currency value decreasing is depreciation.