A "Devaluation" Occurs When

question 115

Multiple Choice

A "devaluation" occurs when

• A) the official price of a currency is raised.
• B) the official price of a currency is lowered.
• C) a nation's currency depreciates under a flexible exchange rate system.
• D) a nation's currency appreciates under a flexible exchange rate system.
• E) none of the above

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Definitions:

Budget Constraint

The financial limit on the consumption choices of an individual or household based on income and the prices of goods and services.

Income Change

A variation in the amount of earnings received by a person, household, or economic entity over a period.

Inferior Good

A good for which an increase in income reduces the quantity demanded

Good A

A placeholder term typically used in economic models to represent a generic item or service in the market.