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WAEC Economics 2014 Question 43

Question 43

Balance of Payments and Exchange Rates

The likely implication of the devaluation of a country's currency is that

  1. A.exports of such a country become cheaper.
  2. B.importation of goods into such a country becomes cheaper.
  3. C.the value of such a country's currency rises.
  4. D.foreign goods are attracted into the country.
Show the answer and explanation

Answer: A (exports of such a country become cheaper.)

Explanation

After devaluation foreigners need less of their own money to buy the country's goods.