Currency Devaluation and Revaluation Primarily Affect the Economy's Current Account

question 6

True/False

Currency devaluation and revaluation primarily affect the economy's current account and have secondary effects on domestic employment and inflation.

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Definitions:

Diminishing Returns

The decrease in the marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, keeping all other factors constant.

Foreign Portfolio Investment

Investment in financial assets from another country, such as stocks or bonds, which does not provide the investor with direct control over the assets.

GNP

Gross National Product; the total value of all goods and services produced by a country's residents over a specified period, including income from abroad.

GDP

Gross Domestic Product, the total monetary value of all goods and services produced within a country's borders in a specific time period.