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15 Aug 2024, 01:30
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Difficulty:
95%
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Question Stats:
33% (01:32) correct
67%
(01:44)
wrong
based on 212
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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.
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.
18 Aug 2024, 02:58
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can someone please explain this?
If the dollar value is decreasing the exports will be cheaper to foreigners, and visa versa when it comes to import.
If the dollar value is decreasing the exports will be cheaper to foreigners, and visa versa when it comes to import.
18 Aug 2024, 09:26
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Exports become cheaper, meaning foreigners are more likely to buy American products. So foreigners will buy more American products, and Americans are less likey to buy foreign products, Hence the Balance of Payment will improve, as exports increase and imports decrease
