Suppose the government of New Country fixes the exchange rate of its currency, the Newo, in terms of the U.S. dollar. Initially the exchange rate is set at $0.50 per Newo. Later the government changes the exchange rate to $0.75 per Newo. This is an example of a(n):

Question

Quizplus · Accepted Answer

A currency revaluation is an increase in the official value of a currency in a fixed-exchange-rate system. The Newo is worth more in terms of dollars after government changed the exchange rate.

Suppose the Government of New Country Fixes the Exchange Rate