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Question
______ occurs when the currency exchange rate is officially lowered under a fixed exchange rate system.
Options
Devaluation
Depreciation
Both devaluation and depreciation
None of the above
MCQ
Fill in the Blanks
Solution
Devaluation occurs when the currency exchange rate is officially lowered under a fixed exchange rate system.
Explanation:
It occurs when, under a fixed exchange rate system, the currency exchange rate is officially decreased. It exists in the context of a fixed exchange rate.
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Foreign Exchange Market - Determination of the Exchange Rate
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