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Economics · Oct / Nov 2018 · Paper 12 · Question 29

2281Foreign exchange rates

A country has experienced a devaluation of its currency. What are the likely results of the devaluation?

  1. Aimports: price decreases; exports: value decreases
  2. Bimports: price decreases; exports: value increases
  3. Cimports: price increases; exports: quantity decreases
  4. Dimports: price increases; exports: quantity increases

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Correct answer: D. imports: price increases; exports: quantity increases

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