Question

Select the correct outcomes up depreciation in a country's currency-using the code given below:
1. Export of the country goes up as value of the export falls in the international market.
2. At times, countries use it as a means to promote their exports.
3.Promoting exports through depreciation in ones currency is like selling national assets at throwaway prices to the world.

• A. Only 1
• B. Only 3
• C. 2 and 3
• D. 1,2 and 3

Answer 1

Answer: (D)

1,2 and 3

Depreciation makes a country's exports become cheaper in the international market (i.e. the value of export items fall for the importers)this makes the country export more (increase in 'volume' of the export). Countries use depreciation as a tool to promote their exports (in present times, China has been doing the same)but such a policy is not healthy in long-term.