A devaluation of a currency under a fixed-exchange-rate system occurs when the level at which the currency is fixed is:
A) increased.
B) decreased.
C) allowed to float.
D) kept fixed within a band.

Question

Quizplus · Accepted Answer

A devaluation of a currency under a fixed-exchange-rate system occurs when the level at which the currency is fixed is decreased. This means that the value of one unit of the currency is decreased in relation to another currency with which it is fixed, making it cheaper to buy goods and services from the country with the devalued currency.

A Devaluation of a Currency Under a Fixed-Exchange-Rate System Occurs