New 55% Off on All Courses - Enroll Now! Click Here

    Question

    Devaluation of currency leads

    to
    A expansion of export trade Correct Answer Incorrect Answer
    B contraction of import trade Correct Answer Incorrect Answer
    C expansion of import substituting Correct Answer Incorrect Answer
    D all of the above Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Devaluation leads to a country’s exports to become less expensive as the currency is deliberately adjusted down to other currencies, making imports more expensive, making domestic consumers less likely to purchase them thus the domestic companies are encouraged to substitute imports.

    Practice Next