Question

The Australian dollar (AUD) appreciated by 41.41% against the Malaysian Ringgit from 1997-1998. By how much did the Ringgit depreciate against the dollar?

A. Depreciated by 29.28%

B. Depreciated by 41.28%

C. Depreciated by 42.82%

D. Depreciated by 70.67%

Answer 1

The correct answer is "A"

Suppose AUD/Ringgit is 100 (Means 1 AUD can buy 100 Ringitt)

Now as AUD appreciated by 41.41%, so AUD/Ringgit is now 141.41 (So 1 AUD can now buy more Ringitt)

Now think of it from Ringitt's perspective. If AUD/Ringgit is 100 then Ringitt/AUD = Inverse, that is 1/100 = 0.01

After appreciation, AUD/Ringgit is 141.41 then Ringitt/AUD = Inverse, that is 1/141.41 = 0.00707

Net Depreciation = {(Old Rate- New Rate)/ Old rate} * 100

= {(0.01- 0.00707)/ 0.01} * 100

= 29.28%

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