UPSC PRELIMS · ECONOMICS · CURRENCY DEVALUATION
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?
Take a breath. Choose one. Press A–D on your keyboard if you like.
EXPLANATION
Devaluation can improve export competitiveness, but it does not necessarily increase the foreign value of the currency or necessarily improve the trade balance.
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