Q150
Devaluation of currency leads to
A.
fall in domestic prices
B.
increase in domestic prices
AnswerC.
no impact on domestic prices
D.
erratic fluctuations in domestic prices
Answer: Option B
Solution
Answer: Option B
Solution:
Devaluation is the decision to reduce the value of a currency in a fixed exchange rate. A devaluation means that the value of the currency falls. Domestic residents will find imports and foreign travel more expensive. However domestic exports will benefit from their exports becoming cheaper.