Check GMAT Club Decision Tracker for the Latest School Decision Releases https://gmatclub.com/AppTrack

 It is currently 29 May 2017, 06:02

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# The exchange rate is the ruling official rate of exchange of

Author Message
GMAT Club Legend
Joined: 15 Dec 2003
Posts: 4288
Followers: 43

Kudos [?]: 469 [0], given: 0

The exchange rate is the ruling official rate of exchange of [#permalink]

### Show Tags

23 Dec 2003, 18:51
00:00

Difficulty:

(N/A)

Question Stats:

33% (01:03) correct 67% (01:00) wrong based on 2 sessions

### HideShow timer Statistics

The exchange rate is the ruling official rate of exchange of dollars for other currencies. It determines the value of American goods in relation to foreign goods. If the dollar is devalued in terms of other currencies, American exports (which are paid for in dollars) become cheaper to foreigners and American imports (paid for by purchasing foreign currency) become more expensive to holders of dollars.

What conclusion can be drawn from the above?

A) There are certain disadvantages for the United States economy attached to devaluation.
B) The prospect of devaluation results in a speculative outflow of funds.
C) By encouraging exports and discouraging imports, devaluation can improve the American balance of payments.
D) The difference between imports and exports is called the Trade Gap.
E) It is possible that inflation neutralizes the beneficial effects of devaluation.
Manager
Joined: 29 Aug 2003
Posts: 240
Location: MI
Followers: 1

Kudos [?]: 30 [0], given: 0

### Show Tags

24 Dec 2003, 11:47
Geethu wrote:
Why not A ?

You cannot decide the effect of devaluation on the overall economy until you don't know the relation between the import and export.

Official ans ?
GMAT Club Legend
Joined: 15 Dec 2003
Posts: 4288
Followers: 43

Kudos [?]: 469 [0], given: 0

### Show Tags

24 Dec 2003, 12:08

The best conclusion that can be drawn from the statement is one that sums up the facts that are given in one sentence; thus, (C) is the best answer. Although the given paragraph states if there is devaluation of the dollar, American imports will become more expensive, this will not necessarily be a disadvantage for the US economy. Hence, (A) is not appropriate. Alternative (B) is also inappropriate, because it highlights a disadvantage that may arise from the expectation of devaluation, but which is not dealth with in the paragraph. Alternatives (D) and (E) are both helpful pieces of information, but they cannot be concluded from the given text.
Manager
Joined: 29 Aug 2003
Posts: 240
Location: MI
Followers: 1

Kudos [?]: 30 [0], given: 0

### Show Tags

24 Dec 2003, 16:13
24 Dec 2003, 16:13
Similar topics Replies Last post
Similar
Topics:
*700* Student Advisor: One of our exchange students faced multiple 0 09 Apr 2016, 13:47
Country Y uses its scarce foreign-exchange reserves to buy 0 15 Aug 2012, 04:11
Country Y uses its scarce foreign-exchange reserves to buy 0 24 Sep 2013, 14:15
1 The exchange rate between the currency of Country X and that 7 13 Aug 2009, 23:44
violent crime rates 4 30 Oct 2009, 06:46
Display posts from previous: Sort by