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WAEC Economics 2024 Question 45

Question 45

Balance of Payments and Exchange Rates

Devaluation of currency will help to correct balance of payments deficit if a country's

  1. A.exports have perfectly inelastic demand.
  2. B.imports have inelastic demand.
  3. C.exports have elastic demand.
  4. D.productivity is low.
Show the answer and explanation

Answer: C (exports have elastic demand.)

Explanation

Cheaper exports then sell in much larger quantities, raising earnings.