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    Question

    The exchange rate is the ruling official rate of exchange of dollars for other currencies . It determines the value of American goods in relation to foreign goods. If the the dollar is devalued in terms of other currencies , American exports ( which are
    There are certain disadvantages for the United States economy attached to devaluation
    The prospect of devaluation results in a speculative outflow of funds
    By encouraging exports and discouraging imports, devaluation can improve the American balance of payments
    The difference between the exports and imports is called the trade gap
    It is possible that inflation neutralises the beneficial effects of devaluation
    ANS : 3
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