What does the term 'devaluation' refer to?

Multiple choice question for Basic of Economics. Select an option, then review the explanation below.

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Exchanging the rupee for goldReducing the value of a currency relative to another foreign currencyIncreasing the rupee's value compared to a foreign currencyNone of the above

Explanation

Devaluation is the deliberate reduction in the value of a country's currency relative to another currency. It does not involve converting the rupee into gold or making it more valuable against foreign currencies.

Practice related questions from the same subject.

1.Which of the following best describes deflation?
2.Under what condition can two nations benefit from engaging in international trade?
3.Which of the following represents a legitimate form of currency?
4.Which political ideology is best summarized by the phrase, "From each according to his ability, to each according to his needs"?
5.Which type of currency experiences a decline in its exchange rate due to a continuous balance of payments deficit?

What does the term 'devaluation' refer to?

Explanation

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