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Question
What is Devaluation under a Fixed Exchange Rate System?
Options
Fall in domestic currency value under a Flexible system
Rise in domestic currency value under a Flexible system
Official increase in exchange rate; domestic currency becomes cheaper
Official decrease in exchange rate; domestic currency becomes costlier
MCQ
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Solution
Devaluation is an official increase in the exchange rate under a Fixed Exchange Rate System. It makes the domestic currency cheaper.
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