In a system in which there is an administered exchange rate, what is the term used when the government sets the rate higher to buy fewer units of foreign currency?
A) a revaluation
B) an appreciation
C) a depreciation
D) a devaluation

Question

Quizplus · Accepted Answer

When a government sets the exchange rate higher to buy fewer units of foreign currency, it is called a devaluation. This is typically done to make the country's exports cheaper and more competitive on the global market. A devaluation can also help reduce trade deficits by making imports more expensive.

In a System in Which There Is an Administered Exchange