PRC-3 · Chapter 20 · Question 30 of 30
Assume the Pakistani Rupee (PKR) undergoes a massive devaluation against the US Dollar. Assuming elastic demand, what is the expected impact on Pakistan's international trade?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Exports become cheaper for foreigners, increasing export volume
Explanation
A devaluation means foreign currency buys more domestic currency, making domestic exports cheaper for foreign buyers and generally boosting export volume.
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