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Devaluation is a
  • a)
    Reduction in the price of domestic currency in the foreign exchange market by the govt.
  • b)
    Reduction in the price of foreign currency in terms of domestic currencies by the govt.
  • c)
    Increase in the price of domestic currency in terms of all foreign currencies by the govt.
  • d)
    Reduction in the price of domestic currency in terms of all foreign currencies by the govt.
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Devaluation is aa)Reduction in the price of domestic currency in the f...
Devaluation is the deliberate downward adjustment of the value of a country's money relative to another currency, group of currencies, or currency standard. Countries that have a fixed exchange rate or semi-fixed exchange rate use this monetary policy tool. It is often confused with depreciation and is the opposite of revaluation, which refers to the readjustment of a currency's exchange rate.
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Devaluation is aa)Reduction in the price of domestic currency in the f...
Explanation:

Devaluation is:
- Devaluation is a deliberate downward adjustment in the value of a country's currency relative to another currency or a standard.
- It is usually done by the government or central bank of a country to improve the country's balance of trade by making exports cheaper and imports more expensive.
- When a government devalues its currency, it lowers the value of its currency compared to other currencies.
- This means that the price of domestic currency decreases in terms of all foreign currencies.
- As a result, exports become cheaper for foreign buyers while imports become more expensive for domestic consumers.
- Overall, devaluation can help boost a country's export competitiveness and reduce trade deficits.
Therefore, the correct answer to the question is option 'D': Reduction in the price of domestic currency in terms of all foreign currencies by the government.
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Devaluation is aa)Reduction in the price of domestic currency in the f...
Devaluation is the deliberate downward adjustment of the value of a country's money relative to another currency, group of currencies, or currency standard. Countries that have a fixed exchange rate or semi-fixed exchange rate use this monetary policy tool. It is often confused with depreciation and is the opposite of revaluation, which refers to the readjustment of a currency's exchange rate.
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Devaluation is aa)Reduction in the price of domestic currency in the foreign exchange market by the govt.b)Reduction in the price of foreign currency in terms of domestic currencies by the govt.c)Increase in the price of domestic currency in terms of all foreign currencies by the govt.d)Reduction in the price of domestic currency in terms of all foreign currencies by the govt.Correct answer is option 'D'. Can you explain this answer?
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