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Economics · Oct / Nov 2023 · Paper 12 · Question 18

2281Foreign exchange rates

Why would devaluing the international value of an economy's currency help reduce unemployment?

  1. ADevaluing the currency would increase the cost of production.
  2. BDevaluing the currency would increase the confidence of investors.
  3. CDevaluing the currency would increase the foreign demand for domestic products.
  4. DDevaluing the currency would increase the demand for imports.

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Correct answer: C. Devaluing the currency would increase the foreign demand for domestic products.

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