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Q. What is Exchange Rate?
Exchange Rate: The ‘price' at which currency of one country can be converted into the currency of another country. A country's currency is ‘strong,'or its exchange rate is ‘high,' if it can purchase more of another country's currency. A country's currency appreciates when its value (compared to other currencies) grows; it depreciates when its value falls.
Purchasing power parity: When PPP holds, the domestic currency has the same purchasing power at home and in any other country. PPP also implies that a foreign currency will de
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