Devaluation of currency means ____________________.

Reduction in the value of domestic currency by the market forces

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Reduction in the value of domestic currency by the government

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Both (a) and (b)

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Neither (a) nor (b)

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Solution

The correct option is B Reduction in the value of domestic currency by the government
Devaluation of currency mainly occurs in countries with fixed exchange rate. It refers to the reduction in the value of domestic currency by the government.

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Similar questions

Q17. Consider the following statements about Currency Wars:

1. A currency war refers to a situation where a number of nations seek to deliberately depreciate the value of their domestic currencies.

2. Currency wars are also known as competitive devaluations.

Which of the above statements are correct?

State any two factors that explain expansion of demand for a foreign currency in response to a fall in its price (in terms of the domestic currency).

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