The Main Reason(s) Why Governments Sometimes Choose to Devalue Their

question 58

Multiple Choice

The main reason(s) why governments sometimes choose to devalue their currencies is (are)

• A) devaluation makes domestic goods more expensive in relation to foreign goods.
• B) devaluation makes domestic services more expensive in relation to foreign services.
• C) devaluation increases foreign reserves held by the central bank.
• D) devaluation improves the current account and increases foreign reserves held by the central bank.
• E) devaluation hurts foreign currencies.

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Definitions:

Theoretical

Relating to or based on theory, these ideas and principles are used to develop models or explanations for phenomena, as opposed to practical applications or empirical evidence.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Chance

The occurrence of events without any predictable pattern or cause, often expressed in terms of probability.

Hit

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