4.Suppose a country with a fixed exchange rate decides to implement a devaluation of its
currency and commits to maintaining the new fixed parity. This implies expansion in the
demand for its goods and expansion in the monetary supply. True or false?
True. A devaluation of a country's currency can increase demand for its goods by making them relatively cheaper for foreign buyers. Additionally, an expansion in the monetary supply can help stimulate economic activity and increase demand for goods domestically.
