SSC
INDIAN ECONOMY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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fixing the value of currency in multilateral consultation with the IMF, the World Bank and major trading partners
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fixing the value of the currency in conjunction with the movement in the value of a basket of pre-determined currencies
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permitting the currency to seek its worth in the international market
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reduction in the value of a currency vis-a-vis major internationally traded currencies
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Detailed explanation-1: -The current answer is reduction in the value of a current vis-a-vis major internationally traded currencies. Currency devaluation refers to the downward adjustment to a country’s value of money relative to a foreign currency or standard.
Detailed explanation-2: -The correct answer is a Reduction in the value of a currency vis-a-vis major internationally traded currencies. Devaluation occurs when a country intentionally reduces the value of its currency relative to one or more foreign countries.
Detailed explanation-3: -Devaluation causes a country’s exports to become less expensive, making them more competitive on the global market. This in turn means that imports are more expensive, making domestic consumers less likely to purchase them.
Detailed explanation-4: -Devaluing Currency A weak domestic currency makes a nation’s exports more competitive in global markets, and simultaneously makes imports more expensive. Higher export volumes spur economic growth, while pricey imports also have a similar effect because consumers opt for local alternatives to imported products.