Attempt this previous-year question. The correct option stays hidden until you choose.
Consider the following statements:
The effect of devaluation of a currency is that it necessarily:-
1. improves the competitiveness of the domestic exports in the foreign markets.
2. increases the foreign value of domestic currency.
3. improves the trade balance.
Which of the above statements is/are correct?
Pick an option to check yourself.
• Correct Answer: A
• Devaluation lowers export prices in foreign currency, boosting competitiveness.
• It reduces, not increases, the foreign value of domestic currency.
• Trade balance improvement depends on Marshall-Lerner condition (elasticity of demand); it is not guaranteed.
Attempt Prelims MCQs or open Mains questions by paper — then continue the same bank inside the app with visual decks.
GyanGram