Article Summary Citing Excessive Currency Regulation Under the Nation's Previous Regime,Uzbekistan's Recently

question 107

Multiple Choice

Article Summary
Citing excessive currency regulation under the nation's previous regime,Uzbekistan's recently elected president,Shavkat Mirziyoev,announced a 50 percent devaluation of the Central Asian nation's currency,the soum,in September 2017.The devaluation changed the official exchange rate from 4,210.35 soum per U.S.dollar to 8,100 soum per U.S.dollar,putting it in line with the black market exchange rate.Economic slowdowns and falling currency values in China,Russia,and Kazikstan,Uzbekistan's largest export markets,have hurt this nation's economy which depends on commodity exports and remittances.According to Oleg Kouzmin,an economist at Renaissance Capital in Moscow,"The decision … helps reduce extreme disparities between official and 'grey market' exchange rates that were witnessed in Uzbekistan in the previous years.Economists generally love to see devaluations -- one of the things than makes them different from politicians -- devaluation always gives the country a chance for a fresh start."
Source: Ksenia Galouchko "This Currency's Sudden 50% Devaluation May Attract Bargain Hunters," bloomberg.com,September 5,2017.
-Refer to the Article Summary.All else equal,a depreciation of the Uzbekistani soum relative to a currency such as the U.S.dollar should ________ the current account balance in Uzbekistan and therefore ________ the financial account balance in Uzbekistan.

• A)increase; increase
• B)increase; decrease
• C)decrease; increase
• D)decrease; decrease

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Definitions:

Change in Total Utility

The difference in the overall satisfaction a consumer receives before and after the consumption of an additional unit of a good or service.

Consuming One More Unit

The action or decision of using up an additional unit of a good or service and its impact, often related to marginal utility.

Budget Line

A graphical representation that shows all possible combinations of two goods that an individual can afford given their income and the prices of the goods.

Consumer Income

The total money earned by consumers from all sources, including wages, salaries, investments, and benefits, which impacts their purchasing power.