Question

Select the correct statement/statements for the situation when a currency goes for 'devaluation' using the code given below:
1. Fall in the value of currency vis-a-vis international currencies.
2. Exports become more competitive.
3. Trading partners see fall in their exports.

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

Answer 1

The correct option is D 1, 2 and 3

Though devaluation in currencies are discouraged and negated with excessive pressure coming from the trading partners of the country, it ultimately makes goods of the country cheaper in the world market and the economy earns profit from the exports. The increase in profit of export takes place due to increase in 'volume' of the exports. In practice, exporters forego more goods to earn the same amount of foreign currency.