The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4

-Suppose the official gold value of the Brazilian real changes from 457 reals per ounce to 528 reals per ounce. We can then say that:
A)the Brazilian real has been devalued.
B)the Brazilian economy is expected to experience rapid inflation.
C)gold has been devalued.
D)the Brazilian real has appreciated in value.
E)gold is now cheaper to purchase in Brazil than it was before.

Question

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
 
-Suppose the official gold value of the Brazilian real changes from 457 reals per ounce to 528 reals per ounce. We can then say that:
A)the Brazilian real has been devalued. 
B)the Brazilian economy is expected to experience rapid inflation. 
C)gold has been devalued. 
D)the Brazilian real has appreciated in value. 
E)gold is now cheaper to purchase in Brazil than it was before.

Quizplus · Accepted Answer

A change from 457 to 528 reals per ounce implies that it now takes more reals to purchase an ounce of gold. This means that the currency has been devalued, as it now has a lower value relative to gold.

The Figure Below Shows the Demand (D) and Supply (S)