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WAEC Economics 2002 Question 47

Question 47

Balance of Payments and Exchange Rates

Devaluation of currency in a country is likely to lead to

  1. A.increasing population.
  2. B.increasing imports.
  3. C.exports becoming cheaper.
  4. D.reduced exports.
Show the answer and explanation

Answer: C (exports becoming cheaper.)

Explanation

After devaluation foreigners need less of their currency to buy the country's goods, so exports become cheaper.