Suppose the government of New Country fixes the exchange rate of its currency, the Newo, in terms of the U.S. dollar. Initially the exchange rate is set at $0.50 per Newo. In a crisis, the government changes the exchange rate to $0.25 per Newo. This is an example of a(n):
A. appreciation
B. devaluation
C. revaluation
D. depreciation
Answer: B
You might also like to view...
Market exchange is typically an exchange of goods for money, as opposed to goods for goods, because use of money solves the problem of
A) the absence of a coincidence of wants. B) the absence of a double coincidence of wants. C) a coincidence of needs. D) tax evasion.
Which of the following is true about U.S. history prior to the 1950s?
a. The inflation rate remained constant during this period b. Cost-push inflation led to depressions, which were followed by slowly-rising price levels. c. The price level remained constant during this period. d. Major wars resulted in high inflation rates, after which the inflation rate tapered off. e. Major wars resulted in high inflation rates that were usually followed by deflation.
Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?
a. only the one with a low level of output per person. b. only the one with a high level of output per person. c. both d. neither
Which of the following is not an interest bearing asset of commercial banks?
a. Securities b. Loans c. Required reserves d. All of these choices are interest bearing assets of commercial banks.