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Question : The major aim of devaluation is to:

Option 1: encourage imports

Option 2: encourage exports

Option 3: encourage both exports and imports

Option 4: discourage both exports and imports 


Team Careers360 14th Jan, 2024
Answer (1)
Team Careers360 18th Jan, 2024

Correct Answer: encourage exports


Solution : The correct option is to encourage exports .

Devaluation primarily serves to promote exports. A nation can lower the cost of its currency, increase exports and increase its competitiveness in the international market by devaluing its currency. A decision to devalue a currency causes it to lose value. Short-term effects include higher growth, export demand growth and inflation.

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