The devaluation of a domestic currency will be more beneficial to the balance of payments if the:
- Aprices of domestic goods remain constant
- Bprices of exports become cheaper to importers
- Cprices of imports remain constant
- Dprices of exports rise proportionately
Solution & Step-by-step Explanation
Devaluation aims to boost exports by making them cheaper for foreign buyers and making imports more expensive. If domestic prices remain constant, the relative price advantage created by devaluation is preserved, preventing domestic inflation from neutralizing the export competitiveness boost.