Suppose that policy makers decide to revalue the currency, such an action generally represents:
A) a decision to let the currency float.
B) an increase in the domestic price level.
C) a decrease in the pegged value of the foreign currency.
D) an increase in the pegged value of the domestic currency.
E) a decrease in the foreign price level.

Question

Quizplus · Accepted Answer

Revaluing a currency means increasing the value of the domestic currency in relation to a foreign currency. This can be achieved by either increasing the pegged value of the domestic currency or decreasing the pegged value of the foreign currency. Therefore, the correct answer is D, which states an increase in the pegged value of the domestic currency.

Suppose That Policy Makers Decide to Revalue the Currency, Such