Which of the following refers to decrease in the value domestic currency by the government?
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: Devaluation
Devaluation refers to decrease in the value of the domestic currency by the government consciously. A devaluation occurs when a country makes a conscious decision to lower its exchange rate in a fixed or semi-fixed exchange rate whereas, a depreciation is when there is a fall in the value of a currency in a floating exchange rate.