pyq/2021/prelims/8

Consider the following statements:

The effect of devaluation of a currency is that it necessarily:-

1. improves the competitiveness of the domestic exports in the foreign markets.

2. increases the foreign value of domestic currency.

3. improves the trade balance.

Which of the above statements is/are correct?

(A) 1 Only

(B) 1 and 2

(C) 3 Only

(D) 2 and 3