Question : 11) Which one of the following statements the MOST accurate? A) : 1303646

11) Which one of the following statements is the MOST accurate?

A) Devaluation reflects a deliberate government decision.

B) Depreciation reflects a deliberate government decision.

C) Devaluation reflects a deliberate government decision while depreciation is an outcome of government actions and market forces acting together.

D) Depreciation reflects a deliberate government decision while devaluation is an outcome of government actions and market forces acting together.

E) Devaluation and depreciation have the same meaning and the same causes.

12) Which one of the following statements is the MOST accurate?

A) Revaluation reflects an outcome of government actions and market forces acting together while appreciation reflects a deliberate government decision.

B) Revaluation reflects a deliberate government decision while appreciation is an outcome of government actions and market forces acting together.

C) Revaluation reflects a deliberate government decision while appreciation is an outcome of government actions.

D) Revaluation and appreciation have the same meaning and the same causes.

E) Appreciation reflects a deliberate government decision while revaluation is an outcome of government actions and market forces acting together.

13) Under fixed exchange rates, which one of the following statements is the MOST accurate?

A) Devaluation causes a decrease in output, a decrease in official reserves, and a contraction of the money supply.

B) Devaluation causes a rise in output, a rise in official reserves, and an expansion of the money supply.

C) Devaluation causes a rise in output and a rise in official reserves.

D) Devaluation causes a rise in output and an expansion of the money supply.

E) Devaluation causes a rise in official reserves, and an expansion of the money supply.

14) Under fixed exchange rates, which one of the following statements is the MOST accurate?

A) Devaluation causes a rise in output.

B) Devaluation causes a decrease in output.

C) Devaluation has no effect on output.

D) Devaluation causes a rise in output and a decrease in official reserves.

E) Devaluation causes a decrease in output and in official reserves.

15) Under fixed exchange rates, which one of the following statements is the MOST accurate?

A) Devaluation causes a reduction of the money supply.

B) Devaluation has no effect on the stock of money.

C) Devaluation causes an expansion of the money supply.

D) Devaluation causes a reduction in output.

E) Devaluation causes a reduction in official reserves.

16) The main reason(s) why governments sometimes chose to devalue their currencies is (are)

A) devaluation makes domestic goods more expensive in relation to foreign goods.

B) devaluation makes domestic services more expensive in relation to foreign services.

C) devaluation increases foreign reserves held by the central bank.

D) devaluation improves the current account and increases foreign reserves held by the central bank.

E) devaluation hurts foreign currencies.

17) Please draw a figure illustrating the actions the central bank must take to maintain a fixed exchange rate following an increase in output.