What is the effect of a devaluation of a domestic currency? A) Domestic goods will become cheaper in terms of foreign currency, and consequently exports will decrease. B) Domestic goods will become more expensive in terms of foreign currency, and consequently exports will decrease. C) Domestic goods will become cheaper in terms of foreign currency, and consequently exports will increase. D) Domestic goods will become more expensive in terms of foreign currency, and consequently exports will increase.
What is the effect of a devaluation of a domestic currency? A) Domestic goods will become cheaper in terms of foreign currency, and consequently exports will decrease. B) Domestic goods will become more expensive in terms of foreign currency, and consequently exports will decrease. C) Domestic goods will become cheaper in terms of foreign currency, and consequently exports will increase. D) Domestic goods will become more expensive in terms of foreign currency, and consequently exports will increase.
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter11: Foreign Exchange, Trade, And Bubbles
Section: Chapter Questions
Problem 3MC
Related questions
Question
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What is the effect of a devaluation of a domestic currency? |
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A) |
Domestic goods will become cheaper in terms of foreign currency, and consequently exports will decrease. |
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B) |
Domestic goods will become more expensive in terms of foreign currency, and consequently exports will decrease. |
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C) |
Domestic goods will become cheaper in terms of foreign currency, and consequently exports will increase. |
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D) |
Domestic goods will become more expensive in terms of foreign currency, and consequently exports will increase. |
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