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Read this news report about a planned devaluation of the bolivar, the currency of Venezuela.

The president of Venezuela announced that the country would be devaluating the bolivar for the fifth time in nine years. The official rate is falling from 4.3 bolivars to the dollar, to 6.3, a 32% devaluation. By increasing the bolivar value of exports of oil to the US and other nations, the government hopes to alleviate a budget crisis caused by its increasing reliance on borrowing to meet spending obligations.

In response to the announcement, the people of Venezuela lined up today to buy televisions, electronics, and airline tickets in order to protect themselves from projected price increases.

By devaluating the bolivar, the president of Venezuela has

followed the law of supply and demand.
allowed the exchange rate to remain unchanged.
increased the number of bolivars needed to buy one dollar.
decreased the number of bolivars needed to buy one dollar.

Answers

There is no supply and demand in this article. The exchange rate was affected due to the bolivar's worth being decreased. There was an increase in the number of bolivars per dollar. The president of Venezuela has increased the number of bolivars needed to buy one dollar.  Devaluation is a reduction of a currency's value in comparison to other currencies. Because it takes two more bolivars to buy a dollar than before, it shows a clear sign of devaluation.


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