Question : Net exports will increase.
Which effect of depreciation is highlighted here?
Option 1: Increase in exports
Option 2: Decrease in imports
Option 3: Increase in the national income
Option 4: All of the above.
Answer (1)
25th Jan, 2024
Correct Answer:
Increase in the national income
Solution :
Depreciation of a domestic currency means a fall in the price of domestic currency in terms of foreign currency. Net exports will increase the national income, assuming no change in other things.
Hence Option C is correct.
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