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Economics › Foreign Exchange,Currency Devaluation

Economics › Foreign Exchange,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?

Options

(a)

1 only

(b)

1 and 2

(c)

3 only

(d)

2 and 3

Answer

(A)