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In which case will currency devaluation be more beneficial?

  1. A
    If domestic prices of goods remain unchanged
  2. B
    If export prices become cheaper for importers
  3. C
    If import prices remain stable
  4. D
    If export prices increase proportionally

Solution & Step-by-step Explanation

Devaluation of currency is intended to boost exports by making domestic goods cheaper for foreign buyers in international terms. It achieves maximum economic advantage if domestic costs and product pricing stay stable so that the competitive price edge gained via exchange rate adjustment is not canceled out by domestic inflation.

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In which case will currency devaluation be more beneficial?
A
If domestic prices of goods remain unchanged
B
If export prices become cheaper for importers
C
If import prices remain stable
D
If export prices increase proportionally

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EconomicsForeign TradeCurrency Devaluation

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