THe CFA franc was devalued. The rate went from CFA franc 1.00 = French Franc 0.02, to
Question:
THe CFA franc was devalued. The rate went from CFA franc 1.00 = French Franc 0.02, to CFA franc = 1.00 = French Franc 0.01 after the devaluation. One of the counties that used the CFA franc is Senegal. What is the best choice that happened immediately after the franc was devalued?
1. Senegal's exports became less competitive and so Senegal exported fewer goods to France. Senegal's inflation rate decreased.
2. Senegal's exports became less competitive and so Senegal exported more goods to France. Senegal's inflation rate increased.
3. Senegal's exports became more competitive and so Senegal exported fewer goods to France. Senegal's inflation rate decreased.
4. Senegal's exports became less competitive and so Senegal exported fewer goods to France. Senegal's inflation rate increased.
5. Senegal's exports became more competitive and so Senegal exported more goods to France. Senegal's inflation rate increased.
Managing in a Global Economy Demystifying International Macroeconomics
ISBN: 978-1285055428
2nd edition
Authors: John E. Marthinsen