Question

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 bolivar to the us dollar, to 6.3, a 32% devaluation. by increasing the bolivar value of exports of oil to the united states 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 to protect themselves from projected price increases.
what is the expected effect of the devaluation among venezuelas population?
options:
price deflation
declining inflation
rising inflation
increased imports

Explanation:

Devaluation of a currency (bolivar here) typically makes imports more expensive (since more local currency is needed to buy foreign currency for imports) and can lead to rising inflation as import - related costs pass through to consumer prices. The population is lining up to buy goods (televisions, electronics, airline tickets) to protect from projected price increases, which is a response to expected rising inflation due to devaluation. Declining inflation or price deflation don't align with devaluation's typical impact, and while imports increase in cost (not quantity in a way that's the main effect on the population's expectation here), the key expected effect on the population's behavior and prices is rising inflation.

Answer:

rising inflation