Economics · International Trade & Exchange Rate
Which of the following statements regarding devaluation is NOT correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Devaluation tends to increase the production of exports and of import-competing goods.
- 2Devaluation will increase the level of National Income only if there are unemployed resources.
- 3Devaluation will always lead to a deterioration in the terms of trade.✓
- 4Devaluation does not always lead to a decrease in the balance of payments deficit.
Correct answer
Devaluation will always lead to a deterioration in the terms of trade.
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