A revaluation can help reduce a(n) _____ gap. I. inflationary
II) deflationary

Question

Quizplus · Accepted Answer

A revaluation refers to an increase in the value of a currency in relation to other currencies. This can help reduce an inflationary gap by decreasing the price of imports and increasing the price of exports, thus reducing the overall demand for goods and services and ultimately reducing inflation. A revaluation may not be effective in reducing a deflationary gap, as it may further decrease demand for goods and services.

A Revaluation Can Help Reduce A(n) _____ Gap