Question

A country can make its exports to foreign countries cheaper with which of the following methods?
[Pick up the correct statement(s).]
A. Reducing their domestic prices
B. Reducing the foreign exchange rate on its money (devaluing currency)
C. Putting a ban on import of foreign goods

• A. Only (A)
• B. Only (B)
• C. Both (B) and (C)
• D. Both (A) and (B)

Answer 1

The correct option is B Only (B)

A country can make its exports to foreign countries cheaper by reducing the foreign exchange rate on its money. This method is also known as devaluation of curency. Fall in foreign exchange rate is known as devakuation of money.