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
A
There are certain disadvantages for the United States economy attached to devaluation
B
The prospect of devaluation results in a speculative outflow of funds
C
By encouraging exports and discouraging imports, devaluation can improve the American balance of payments
D
The difference between the exports and imports is called the trade gap
Correct Answer: By encouraging exports and discouraging imports, devaluation can improve the American balance of payments