GK
INDIAN ECONOMY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Devaluation of currency will be more beneficial if
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prices of domestic goods remain constant
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prices of exports remain constant
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prices of imports remains constant
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prices of exports rise proportionately
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Explanation:
Detailed explanation-1: -Devaluation of currency will be more beneficial if prices of exports become cheaper to importers. Hence, b is the answer. Devaluation is the reduction in the value of currency and is generally used to combat trade imbalances. It will be more beneficial because more forex will inflow into our country.
Detailed explanation-2: -However, both devaluation and depreciation lead to a fall in the value of the domestic currency in relation to the foreign currency. Consequently, domestic goods become cheaper in terms of foreign currency. Accordingly, exports tend to rise (while imports are discouraged).
Detailed explanation-3: -The correct answer is exports become cheaper to importers.
There is 1 question to complete.