Which of the following terms refers to the government reduction of its currency value relative to the other currency values?
A)devaluation
B)hyperinflation
C)depreciation
D)fluctuation

Question

Quizplus · Accepted Answer

Devaluation refers specifically to a deliberate reduction in the value of a currency by the government or central bank, typically through actions such as lowering interest rates or selling off foreign currency reserves. Hyperinflation refers to a rapid and out-of-control increase in the overall price level of goods and services within an economy, which can be associated with currency devaluation but is not the same thing. Depreciation refers more broadly to a decrease in the value of an asset or currency relative to other assets or currencies, which can occur for a variety of reasons (not necessarily government action), and fluctuation refers to any kind of variability or change in a currency's value over time.

Which of the Following Terms Refers to the Government Reduction